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  • Sector: Assisted Living
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Assisted Living Market Report

For-profit assisted living market size 2020

€5.9bn

Data generated using: France, Germany, Italy, Netherlands, Spain, Switzerland and United Kingdom
€ million 

EMEA Overview: Assisted Living

For-profit assisted living growth

€ million 

For-profit assisted living by country

Values 

Top companies marketshare (2020)

€ million 

Introduction

Assisted living capacity varies significantly both between and within countries. As of 2021, in the UK there are over 600,000 assisted living dwellings, whilst in Spain there are only a couple of thousand and in Portugal there are no more than a few hundred. 

But no country or region is completely saturated. The highest provision rates (the percentage of a country or region’s over 75 population that there is capacity for in its assisted living sector) in Europe are to be found in Germany, France, the UK and certain parts of Switzerland. But even in these places it is almost never higher than 10%.

Assisted living provides many functions and comes in many forms. When it comes to retirement communities that provide a high level of services and amenities - which is where most of the new investment is going - there is no country that has capacity that is anywhere close to its nursing home capacity. 

This presents a major opportunity for investors. The assisted living concept is one that is workable in any country that has a significant nursing home sector. And the benefits of it are clear both from self-reported survey data from residents on their wellbeing and from objective measurements of their health outcomes. Given this and the rapidly ageing population across the developed world, it is no surprise that for none of the countries we examined did we find that strong growth rates in the coming years was not a likely possibility. In fact, in many countries this growth is already underway.

 

Definitions and distinctions

The term ‘assisted living’ is often used in different ways. In the UK it is typically synonymous with ‘extra care housing’, which is housing specifically for elderly people where there is a high level of day-to-day support and care offered to residents. The extra care housing concept excludes sheltered housing, in which residents receive only minimal support (such as access to 24/7 emergency assistance). 

In this report we define the term broadly as housing in a complex exclusively for elderly people where residents receive any level of support and services but live largely independently in their own private dwelling. This definition covers a wide range of different types of elderly housing, from very basic sheltered housing (in which no more than emergency 24/7 assistance is provided) to luxury retirement villages (where residents have access to luxury amenities such as restaurants, gyms and swimming pools). However, it does not include age exclusive housing where no support or services are provided to residents. Nor does it include sheltered housing for younger people with disabilities.

In every European country where there is a well-developed assisted living sector, there is an important distinction between a kind of housing that is roughly equivalent to what is termed ‘sheltered housing’ in the UK and more luxury retirement communities. In France, there are ‘autonomy residences’ (sheltered housing) and ‘service residences’ (retirement housing where services and amenities are provided). In Germany there are ‘Service-Wohnen’ or ‘Betreutes Wohnen’ (service residences) and ‘Seniorenwohnhaus’ (senior citizens’ housing, in other words sheltered housing). In the Netherlands there are ‘service flats’ and sheltered housing. Even in less-developed Spain, there are ‘pisos tutelados’, which is essentially sheltered housing (however, it is typically not age exclusive), and more luxury retirement communities. In most of the countries where this distinction is relevant, sheltered housing is usually provided by the state or housing associations and more luxury retirement communities are almost always provided by private companies (both for-profit and not-for-profit).

In the majority of European countries, the distinction between assisted living and nursing homes is very clear: assisted living involves residents living largely independently in their own private dwelling, whilst nursing homes do not. However, sometimes the distinction gets blurred: in the Netherlands there are ‘verzorgingshuizen’, in which residents are more dependent and receive a lot more support than is typical for assisted living, but which is distinct from nursing homes as residents live in their own private apartment with their own kitchen. The matter is made even more confusing by the fact that a lot of the time assisted living accommodation is provided by the same organisation and in the same complex as nursing homes. This is the case not only in the Netherlands, but also in Italy and Switzerland. The benefit of this arrangement is that if a resident in an assisted living dwelling becomes more dependent, they can easily be moved across into the adjacent nursing home. 

On top of this, in both France and Switzerland there are statutory limitations on increasing the number of nursing home beds and nursing home operators sometimes get round this by developing accommodation that is classed as assisted living but that is aimed at people who are not able to live fully independently and require a level of support comparable to what is provided in nursing homes.

 

Industry size and growth rates

The total annual revenue of the assisted living sector across the seven countries we looked at (UK, France, Germany, Switzerland, Italy, Spain and the Netherlands) is around €18.5 billion. The for-profit sector annual revenue is around €5.7 billion.

The biggest sectors are in Germany, France and the UK. Switzerland also has a similarly large sector relative to its population, but is a smaller country so the sector isn’t as large in absolute terms. 

Often the countries with the smallest sectors are those that exhibit the highest growth potential. Italy, which has no more than about 3,000 assisted living dwellings, could grow by as much as 40% per year over the coming decade. The projected growth rates in most of the other countries is at least 5%, and often much higher. The only country of the seven we looked at that is not currently experiencing rapid growth is the Netherlands.

Across all the countries we looked at, the for-profit sector was growing most strongly, and frequently exhibited growth rates of 10% per annum or higher. The supply of public sheltered housing, by contrast, wasn't undergoing significant growth in any of the countries.

 

Business models

Rental models

In the majority of European countries that have well developed assisted living sectors, assisted living accommodation is usually rented, rather than sold, to the occupier. In France around 95% of service residences (and almost all autonomy residences) are rented. In Italy, at least 90% of assisted living dwellings are rented. In Germany and Switzerland the proportion that are rented is at least that high. Even in the UK, the majority of assisted living accommodation in the sector as a whole is rented to the occupier, it is only in the (relatively small) for-profit sector where it is usually sold. The only countries where we didn’t find that the majority are rented are Spain (where 90% are sold) and the Netherlands (where about 50% are sold).

There are two different models that assisted living companies use for rental properties. Either the operator retains ownership of the property or the property is sold to an external investor. The latter is more common, and is especially dominant in France, Switzerland and Germany, but is also used in the Netherlands, Italy and the UK. An investor - either a real estate investment firm (REIT) or an individual investor - buys the property and then rents it to the operator. This allows the operator to focus on service provision and expanding its network rather than having to worry about the upkeep of the property or sourcing the huge sums necessary to invest in property on a large scale. According to Stefan Buser (of consultancy and investment firm Buser Management), operators will typically gain higher returns on their investment if they focus on service provision and leave the property investment side of things to REITs. 

For-sale models

Within the for-profit assisted living sector in the UK, dwellings are sold more often than rented to the occupier. This is the case both for sheltered housing and for more luxury retirement villages. But the model that for-profit retirement village providers use is different from that used by for-profit sheltered housing providers. Within sheltered housing, the property is typically sold in full to the occupier. Within retirement villages, the operator typically retains a minority share (usually around 20%) in the property when they sell it to the occupier. The occupier is then obliged to pay the operator a fee when it is resold. This provides the operator with a long-term revenue stream that is typically more profitable than service provision. The lack of the possibility of long-term revenue streams for sheltered housing (which doesn’t use this model and where there are little to no services provided) is one of the reasons why there is very little investment into new sheltered housing in the UK.

In Spain the majority of assisted living properties are sold in full to the occupier as a freehold. This has created an issue when the occupier dies and their family members are left with a property that is difficult for them to sell given the age-exclusive requirements. There is at least one company in Spain that has developed an alternative model to remedy this, in which the property is sold under a leasehold agreement whereby the occupier retains ownership until their death, at which point it is returned to the operator.

In the Netherlands, the vast majority of retirement villages (not including sheltered housing) are run as cooperatives in which the properties are usually sold in full to the occupier and the village as a whole is owned collectively by all the residents. All residents have to take on some of the cost of service provision.

Service provision models

The proportion of assisted living operators’ revenue that comes from services varies significantly. At one extreme there is basic sheltered housing where no services are provided aside from 24/7 emergency assistance. Operators providing only this type of assisted living will receive no income from services as the cost of emergency assistance provision will be included in the rental or sale price of the properties. At the other end of the spectrum there are luxury retirement villages, where residents have access to a wide range of services and amenities such as restaurants, bars, gyms and sometimes even saunas and tennis courts. Operators providing this kind of assisted living can have 50% or more of their revenue coming from services. For operators that are mostly selling rather than renting properties to the occupier (as is the case with the majority of for-profit operators in the UK), almost all their operating revenue is from service provision.

For operators that are renting to the occupier, it isn’t always possible to fully separate service revenue and rental revenue, since often some level of services will be included in the rent. This is usually the case in France and Germany, where operators charge a ‘basic rate’ that covers rent and a minimum level of services. Residents are then able to purchase additional services at extra cost if they wish.

 

Market structures

In most of the countries we looked at, there are a few major players that operate multiple assisted living sites and between them have a significant portion (although not usually the majority) of the market, and several smaller companies that operate only one or two assisted living sites. The most concentrated European market is France, where the top ten operators are responsible for over 60% of the overall supply.

In most countries, the larger players are big (and often international) elderly care companies that are often also involved in the nursing home sector. Domitys and Korian are major assisted living players not only in France, but also Italy and Germany.


Demand-drivers

Demographics

The populations of all developed countries are ageing. According to data from Eurostat, in 2018 there were 101.1 million people aged 65 years or or over in the EU, roughly 20% of the total population. This figure will increase by about 50% by 2050, when the over 65 population will make up around 29% of the population. In the UK, there were around 12 million people aged 65 or older in 2018, comprising about 18% of the total population. Barring the introduction of drastic changes to immigration policy or mass euthanasia programs, by 2030 this will have risen to about 15.5 million, when they will make up 22% of the population. And by 2050 around a quarter of the population will be 65 or over. 

This creates several issues, both economic and social, and perhaps the most pressing ones are those around how we ensure that elderly people live as healthily and happily as possible in their final years of life and do this in a cost effective way. The current system that exists by default in most rich countries is that elderly people will choose to stay in their home for as long as they can, until they have some kind of crisis such as a stroke or the death of their partner, at which point they are no longer able to live independently and have no other option than to move into a nursing home. They will then typically stay in the nursing home for no longer than a couple of (usually quite miserable) years, before giving up the ghost. This system is not an effective or efficient way for society to be using its resources to ensure a good quality of life for the elderly. 

Both mental and physical health outcomes have been shown to be better for elderly people who move into assisted living accomodation before they become fully dependent, compared to those that stay at home for as long as they are able to. Assuming these benefits become more widely recognised by policy makers and consumers, the increasing size of the elderly population in developed nations may lead to much greater levels of demand for assisted living.

Ability to pay

A major factor that helps explain differing sizes of assisted living sectors between European countries is income. Rich countries that have high GDP per capita tend to have more developed assisted living sectors than poorer countries. Germany and Switzerland are two of the richest European countries and they also both have a relatively high capacity of assisted living accommodation. In general, richer northern European countries have much greater capacity than poorer southern and eastern European countries. This should be no surprise, given that assisted living (and especially luxury retirement village living) is expensive.

Another major factor that affects retirees’ ability to pay is the proportion who own their own home, and this also varies between countries. But owning your own home only helps you pay for assisted living if you are willing to move out and sell or rent it out, and this is not always the case. Interestingly, for some of the countries we examined, high levels of home ownership amongst retirees seemed to be a barrier for the development of the assisted living sector rather than a supporting factor. For example, in Spain around 90% of elderly people own their own home, but they generally have a preference for holding onto it so that it can be passed on to their offspring when they die. In Switzerland most elderly people own their own home as well and are generally reluctant to move out.

There are also differences in the generosity of pensions that retirees receive between countries. These differences exist even between countries that have similar levels of per capita income.

Unlike nursing homes, there is no European country where the government pays for assisted living for all. However, in the UK, France, Germany, Switzerland and the Netherlands, the government does often cover the cost of living in part or in full for low-income residents.

Culture

All southern European countries have very low levels of assisted living. The major reason for this is cultural. Traditionally, Mediterraneans cohabit between generations and it is not the norm to place your elderly parents in a nursing home, and the same goes for assisted living. But this is beginning to change.

The main barrier to the development of the assisted living sector everywhere is psychological and cultural. The notion of moving out of one’s property (where in many cases they will have spent decades) and into a community specifically for retirees where group activities are organised, is for many people quite a strange one. Those whose health has not yet deteriorated and can still live independently often feel little impetus to make such a move. 

 

Supply-drivers

Costs

One of the most significant costs for developing assisted living accommodation and the one that varies the most by location is the cost of land. And there is a negative relationship between the cost of land in an area and the level of demand for assisted living there. The highest demand for assisted living is in wealthy areas, either in or close to major urban centres. This is also where land is most scarce and expensive.

A significant amount of the money that assisted living residents spend is on the services they receive. However, if the cost of service labour is high it can be difficult for operators to make services profitable. Service labour is more costly in richer countries, not because it is more productive than in lower income countries (it often isn’t) but because workers expect higher wages and minimum wages are higher. This creates a dilemma for businesses operating in the service sector: either they must raise prices to increase profit margins on the services they sell but risk losing demand, or keep prices (and profit margins) relatively low in order to maintain demand. If the demand for a service is elastic (which is often the case for luxury services), providers will be reluctant to raise prices since doing so will result in a fall in revenue (and often a fall in profit as well). According to Michael Voges from the Associated Retirement Community Operators (ARCO), a retirement village trade group, the only for-profit retirement village operator that has managed to make service provision profitable in the UK is Audley; typically UK operators only break even on services.

Access to finance

Property investors may have a preference for investing in regular property that is not age exclusive over assisted living accommodation. The reason for this is that it is less risky (since the pool of potential customers is much larger) and assisted living properties can’t be sold or rented for prices much higher than comparable regular properties (since potential customers can always choose that instead). For operators, there is an obvious way to potentially mitigate this issue which is to not invest in property at all and instead rent the properties they need from an external property investor (this is the asset-light model mentioned above). This only works as a remedy to the problem of investors’ reluctance to invest in age exclusive accommodation, however, if the operator is able to find suitable existing properties to turn into assisted living accommodation. If they aren’t then they will still have to find someone willing to take on the risk of investing in the development of the properties.

In general, with the rise of pan-European REITs often focused on property, the supply of willing investors should increase. Assisted living is sometimes seen as an attractive niche market to be considered alongside student housing or healthcare generally. This can be seen in the UK where for-profit retirement village providers are receiving financial backing from the likes of Schroders, Legal & General, AXA, Royal London (investing in Audley Group) and Goldman Sachs (investing in Riverstone).

Public sector involvement

In every country that has a large assisted living sector, a significant proportion of the assisted living accommodation is sheltered housing. This is typically provided by the state or a housing association. Even when it is provided by a for-profit company, the rent is often subsidized in part or in full by the state.

In contrast, the state has very little involvement in the supply of luxury retirement village housing in any country. The state does, however, sometimes pay for the rent for low income people. This is the case in the UK, where the majority of the 75,000 or so retirement village dwellings are rented out to the occupier under affordable rent schemes.

Regulatory framework and policy support

Given that both mental and physical health outcomes have been found to be significantly better for assisted livers than those who stay at home, not only would overall healthcare costs be reduced if more elderly people lived in assisted living accommodation, but, even more importantly, elderly people and their families would be significantly better off. However, governments generally haven’t recognised this and have failed to ensure that assisted and elderly living generally is considered alongside retail and other commercial properties for new developments. 

Most countries have no regulation specifically aimed at assisted living. There are a few exceptions to this. In the UK, the housing with care sector (not including sheltered housing) is regulated by the Care Quality Commission (CQC), who inspect facilities and provide ratings. In Switzerland, seven cantons had developed regulation specifically for assisted living as of 2018. Assisted living in Germany is also dealt with at the local government level, and some local authorities have developed sector specific regulations.

A major barrier which can make the development of all types of new accommodation more difficult and costly are planning laws. These vary to a significant degree both between and within countries. The most restrictive planning laws are found in the south east of the UK, where greenbelts and NIMBYs often prevent the development of new accommodation. As a rule of thumb, poorer countries and regions tend to have more lax planning laws. This is one factor which makes the development of assisted living cheaper and potentially more profitable in southern European countries.

In France, the government provides subsidies which help with the construction of new properties, and a small tax deduction on some of the services residents receive in for-profit residences.

 

Profitability and future opportunities

As is the case in any sector, markets which currently have the lowest levels of supply generally present the biggest opportunities for future growth and development and investing in assisted living in countries where this is the case will generally yield the highest returns. However, in countries where the current supply is extremely low, such as Spain and Portugal, there is a greater level of risk associated with investing in assisted living, since the concept hasn’t yet been tested there on a large scale.

 

 

Ratio Report: Assisted Living

Typical revenue ratios in assisted living

UK


Most for-profit retirement village accommodation is sold to the occupier, with prices generally slightly higher than comparable regular accomodation. Revenue from services in retirement villages can be anywhere from £5,000 to £20,000 per resident per year.

Sheltered housing rent is typically between £300 and £700 per month, but can reach as high as £900. Most of the variation in cost is down to location. Sheltered housing for sale is typically sold at a slightly lower price than comparable regular accommodation.


France

The average (across all for-profit providers) monthly rent for a single studio in a service residence is €1,090 (this figure is for the top 20 cities only and is the ‘basic rate’, i.e. will include some level of services).1 The average basic spend (not including add-on services) per resident across all apartment types is €1,250.1 However, prices vary depending on location as well as apartment size, and the majority of providers include a basic level of services (such as 24/7 emergency assistance) in the rental price. Customers can choose to pay extra for additional services, either a la carte or in packages (depending on the provider). The average ‘basic rate’ across all providers (for rent plus minimum services) for a single studio ranges from €671 per month in Nîmes to €1,929 per month in Paris as of 2020.1 Residents can spend up to €1,000 per month in addition to this on extra services.

Germany

The average cost of monthly rent for regular accommodation in Germany is around €10 per square metre (according to Statista it was €9.88 for new builds and €8.08 overall in the first quarter of 2020), whereas for for-profit assisted living it is around €30.  Assisted living flats in Germany are slightly smaller than regular flats on average at 24-50 square metres for a one-bedroom and 40-70 square metres for a two-bedroom apartment.2

The cost of rent in service residences in Germany varies significantly based on location: in Dortmund the average rent for a one-bedroom studio is around €750, whilst in Munich it is around €3,4002
(as is the case in France, this includes a minimum level of services). Residents can spend up to €1,000 per month on services in addition to this.

Switzerland

The price of assisted living varies to a significant degree based on location and the number of services provided. Typically, residents in for-profit assisted living accommodation spend around 4,000 - 8,000 CHF (€3,640 - €7,280) per month. They spend around 2,000 - 3,000 CHF (€1,820 - €2,730) on rent (which is about 1,000 CHF more than residents in regular accommodation) 1,000 CHF + (€910+) on services and around 1,000 CHF on taxes and medical support. 

Netherlands

Residents in for-profit assisted living accommodation can pay anywhere from €1,500 to €3,500 per month for rent and services combined.

Italy

Prices are usually higher than regular private accommodation, but lower than nursing homes. The basic rate (for rent plus minimum services) for a single apartment is around €1,500 - €2,000 per month, depending on location. Residents can spend up to €1,000 per month on top of this on additional services. Korian receives between €20,000 and €35,000 per apartment annually.

Spain

Only about 10% of the assisted living accommodation in Spain is rented, rather than sold, to the occupier. For the rental sector, rent alone is usually at least €1,100 per month. Charge for minimum services is typically around €200 per month. Additional services can be added at extra cost by choice. In general, residents who are renting will typically spend anywhere from €2,000 to €4,000 per month. The variability is mostly down to differing rents in different parts of the country.

 

Typical EBITDA margins

UK


The amount of profit for-profit retirement village companies in the UK make often varies significantly even within the same company from one year to the next. This is because these companies usually make the vast majority of their profit from property sales and the deferred payments they receive when the properties are resold (services usually just break even), and the number of property sales and resales that take place each year is highly variable. Pre-tax profit margins will usually be 10-30%, but can be much higher for particular years when property sales are higher than usual (for example, in 2018 Audley and Lifecare Residences had 46% a 69% pre-tax profit margins respectively).

France

Operators can expect to make 10-15% EBITDA.

Switzerland

EBITDA margins can be as high as 10% or more for large, well-run sites. The average EBITDA margin is likely around 5-6%, according to consultant Stefan Buser (of Buser Management).

Spain

Assisted living generally isn't much more profitable than nursing homes in Spain. EBITDA margins are typically around 15% - 20%, according to property group JLL.

 

References:

  1. MoZaïC Asset Management’s Senior Living Market Report on France, lead by Frédéric Dib (CEO at MoZaïC) and Samuel Vetrak (CEO at BONARD), with additional information provided by MoZaïC and BONARD via Frédéric Dib 

  2. MoZaïC Asset Management’s Senior Living Market Report on Germany, lead by Frédéric Dib (CEO at MoZaïC) and Samuel Vetrak (CEO at BONARD), with additional information provided by MoZaïC and BONARD via Frédéric Dib

Assisted Living: France

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 2,5302,6902,8503,0003,2003,4003,6003,800
For-profit sector (€m) 8759251,0101,1001,200 (1,200)1,300 (1,300)1,400 (1,400)1,600 (1,600)
For-profit growth % 9%9%9%9%9% (9%)9% (9%)9% (9%)9% (9%)
Public/non-profit sector (€m) 1,6551,7651,8402,9002,0002,1002,2002,200
France: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Domitys €242m €245m 20%
2 Les Villages D'Or €126m €126m 10%
3 Senioriales €89.9m €89.9m 7.5%
4 Les Girandieres €60.5m €60.5m 5%
5 Les Hesperides (Sopregim) €42.4m €42.4m 3.5%
6 Les Jardins d'Arcadie (Acapace Group) €42.4m €42.4m 3.5%
7 Espace et Vie €26.5m €26.5m 2.2%
8 Idylia €22.3m €22.3m 1.9%
9 Cogedim Club €19.5m €19.5m 1.6%
10 OBEO Residences €16.8m €16.8m 1.4%
See all operators
€ million 

Introduction

France has one of the largest and most developed assisted living sectors in Europe, but the for-profit sector is still relatively young. The sector is expanding rapidly, however, and there is a significant opportunity to take advantage of high levels of untapped demand which will only increase as the population ages.
 

Definitions 

The term ‘assisted living’ when applied to the French market usually means exactly what we mean by the term: it comprises all senior living arrangements where residents live in a communal complex specifically for elderly people but in their own separate dwelling and receive some level of support or services. 

The most important distinction in the French market is between ‘autonomy residences’ and ‘service residences’. This is roughly equivalent to the distinction between ‘sheltered housing’ and ‘retirement villages’ in the UK: ‘autonomy residences’ are older and usually more run-down properties that were formerly social housing and are now in the vast majority of cases run either by local authorities or not-for-profits. Rent and services in autonomy residences are heavily (sometimes even fully) subsidised by the government and provided on a means-tested basis.

‘Service residences’ are usually run by for-profit companies (with a small number being provided by not-for-profits) and usually provide a higher level of services. However, there is a lot of variation in the number of services provided. The legal definition of service residences requires that a minimum of three services be provided, but the more luxury service residences provide many more than that.

  

Industry size and growth rate

We estimate the annual revenue for the assisted living sector as a whole in France (including both service residences and autonomy residences, whether for-profit, not-for-profit or public) to be €3.4 billion. We estimate the annual revenue for the for-profit provision of service residences to be €1.3 billion. These figures comprise revenue from operations (rent and services) only. Some assisted living companies in France also make money from selling properties (either to the occupier or to an external investor). This estimate does not include revenue from this source.

According to MoZaïC Asset Management’s Senior Living Market Report on France, as of 2019 there were around 3,000 assisted living complexes in France with a total of 180,000 apartments. The majority of these sites (around 2,400) were autonomy residences. The remainder were service residences, the vast majority of which (at least 95%) provided by for-profit companies. There were only around 700 for-profit service residences at the start of 2021, providing a total of 55,000 dwellings.*
 

This figure is set to grow, however, with around 250 new service residence sites in development as of mid-2020.* Between 2021 and 2025, the number of service residences will grow by a minimum of 30% but could grow by as much as 50%.  

With 7,000 new apartments built in 2020, the annual growth rate in terms of number of apartments provided by the entire assisted living sector (service residences and autonomy residences) was about 4%, and may grow to 6-7% over the next few years.*  

Most of the new apartments being built are in the for-profit service residence sector.* The annual growth rate in the number of for-profit service residence apartments will be around 8-10% between 2021 and 2025. 

The figures for annual growth in total revenue will be slightly higher than these figures since some of the major assisted living companies are planning to increase revenue through providing more services as well expanding the number of apartments they provide.

 

Demand vs. supply

For-profit service residences have on average 79 apartments each* and the average number of residents per apartment is 1.2, so with current (2021) supply there is capacity for around 66,000 residents in total in the for-profit service residence sector. This figure is just over 1% of the total number of over 75s in France. In the sector as a whole there is capacity for around 220,000 people - around 3.67% of the total over 75 population. With the number of seniors expected to grow rapidly over the next few years and French nursing homes having become increasingly over-burdened and medicalised (not to mention the crisis brought on by the pandemic), even with the current rate of expansion in supply, there will not be enough capacity to service all of the demand for these types of properties.

Paris, Toulon and Nice provide the greatest opportunities for expansion for service residences. The provision rate (existing capacity of service residences relative to the total over-75 population) is very low in these places (in Paris it is 0.1%, in Nice it is 0.5%),* and, despite land being scarce and expensive, the number of seniors and their willingness to pay is higher than in other places.

For-profit service residence providers are showing most interest in developing new sites in Angers, Lyon and Toulouse as of 2020.*


Market structure

The market for service residences is concentrated, with over 60% of sites provided by the top ten companies in the sector as of 2021.* 
 

Rental vs. sale 

Assisted living properties are almost always rented rather than sold to the occupier in France. Domitys, for example, only sell to 2% of their customers. The only for-profit service residence companies that sell a significant number of properties to the occupier are Seniorales and Les Villages d’Or, each of which sell roughly a third of their properties as of 2020.* All the other major companies rent the vast majority if not all of their properties. Around 5% of service residence properties are sold to the occupier overall.


Prices and product

The average (across all for-profit providers) rent for a single studio in a service residence is €1,090 (this figure is for the top 20 cities only and is the ‘basic rate’, i.e. will include some level of services).* The average basic spend (not including add-on services) per resident across all apartment types is €1,250.* However, prices vary depending on location as well as apartment size, and the majority of providers include a basic level of services (such as 24/7 emergency assistance) in the rental price. Customers can choose to pay extra for additional services, either a la carte or in packages (depending on the provider). The average ‘basic rate’ across all providers (for rent plus minimum services) for a single studio ranges from €671 per month in Nîmes to €1,929 per month in Paris as of 2020.*

The range of services on offer varies a lot. Luxury services such as a swimming pool, sauna and spa are only provided by a minority of service residences (in the top 20 cities, 30% have a pool, 22% have a spa and only 6% have a sauna). The majority have a restaurant (78%), library (70%), TV room (68%) and gym (54%) and the majority have all apartments fitted with a balcony (65%). The vast majority of service residences have 24/7 emergency assistance (87%), security measures (89%), common areas (90%) and some form of entertainment (94%).*

It is difficult to separate income assisted living companies receive from services and income they receive from rent, since the vast majority of for-profit assisted living companies include some level of service in the price of rent, with the option to add additional services on by paying more. On average around 25% of for-profit assisted living company’s operating income comes from services alone, with the remainder coming from customer’s basic spend on rent with minimum services.
 

Profitability

The average prime net yield on investment into assisted living properties was just over 4% in 2020.* 

Domitys has an EBITDAR margin of slightly over 50% for ‘stabilised’ residences (meaning after all properties have been sold - usually to an external investor). However, the profit margin will be much lower when taking into account all expenses.

One of the most significant costs for for-profit assisted living companies in France is rent. French assisted living companies prefer an asset-light model in which they don’t take ownership of the properties they rent at any point. Instead, properties are typically bought by an external investor (either an individual or an institutional investor), from whom the operator then rents them from. Therefore, Domitys’ EBITDA is much lower than its EBITDAR; in 2020 it was about 15%.
 

Policy support

Whilst policy is generally supportive of the for-profit sector, there are some difficulties. Planning restrictions are generally tighter in France than in many other parts of Europe (however, usually not as stringent as in the South East of the UK). On the other hand, the government provides subsidies which help with the construction of new properties, and a small tax deduction on some of the services residents receive in for-profit residences.

 

*Source: MoZaïC Asset Management’s Senior Living Market Report on France, lead by Frédéric Dib (CEO at MoZaïC) and Samuel Vetrak (CEO at BONARD), with additional information provided by MoZaïC and BONARD via Frédéric Dib 

 

Assisted Living: Germany

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 3,5524,0504,6175,2635,6006,0006,4206,869
For-profit sector (€m) 6718731,1351,4751,770 (1,770)2,000 (2,000)2,400 (2,400)2,880 (2,880)
For-profit growth % 30%30%30%20%20% (20%)13% (13%)20% (20%)20% (20%)
Public/non-profit sector (€m) 2,8813,1773,4823,7883,8304,0004,0203,989
Germany: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Pro Seniore Unternehmensgruppe €177m €590m 10%
2 Alloheim Senioren-residenzen GmbH €169m €910m 9.5%
3 Korian Group €139m €3.9bn 7.8%
4 Rosenhof €101m €101m 5.7%
5 Renafan GmbH €68m €179m 3.8%
6 Convivo Gruppe €52.5m €210m 3%
7 Cura €49m €228m 2.8%
8 Schones Leben Gruppe €48m €148m 2.7%
9 Vitanas - Pflegen & Wohnen €45m €390m 2.5%
10 K&S Seniorenresidenzen €39m €128m 2.2%
See all operators
€ million 

Introduction

Germany has one of the largest and most developed assisted living sectors in Europe and has by far the largest supply of assisted living accommodation in which services and amenities are provided. Aside from a slowdown in new builds in 2020 due to the pandemic, the sector has seen consistently high year-on-year growth over the past decade, and this looks set to continue in the years to come. However, even with the current rapid rate of expansion, supply will not keep up with overall demand from Europe’s largest elderly population. There remains plenty of scope for further development of the for-profit sector, in particular with regards to more affordable provision. The for-profit sector has to date focused exclusively on the higher end of the market, but the opportunities there may soon be exhausted.

 

Definitions

There is no official regulatory definition of assisted living in Germany. However, according to MoZaïC Asset Management’s Senior Living Market Report on Germany, it is generally recognised that there are five distinct living options for elderly people in Germany: community living, nursing homes, service residences, senior citizens’ housing and assisted living communities. 

We define assisted living as accomodation in a communal complex specifically for elderly people where residents live in their own private dwelling. Community living and nursing homes obviously do not fall under this definition. Assisted living communities, or ‘Ambulant betreute Wohngemeinschaften’, are also  - despite the name - not included. These communities involve elderly people who have a high need for care (often with dementia) living together in a shared apartment, rather than on their own. 

The remaining two options are both covered by our definition. The distinction between service residences (‘Service-Wohnen’ or ‘Betreutes Wohnen’) and senior citizens’ housing (‘Seniorenwohnhaus’) is roughly equivalent to the distinction between retirement villages and sheltered housing in the UK: service residences provide a much higher level of services and amenities than senior citizens’ housing. Whilst senior citizens’ housing may have communal areas and residents may receive care and support in their homes, they do not have restaurants, bars, gyms or other such facilities.

 

Industry size and growth rate

We estimate the size of the entire assisted living market (including both service residences and senior citizens’ housing) in Germany to be at least €6 billion in terms of annual revenue in 2021. This figure includes for-profit, not-for-profit and state provision.

The total number of service residence dwellings is around 315,000 as of 2021, making it by far the largest sector of this type in Europe. These dwellings are spread across a total of 7,050 sites. 65% of these residences are supplied by not-for-profits, 30% by for-profits and 5% by the state.* 

The number of senior citizens’ housing (sheltered housing) units in Germany is not known, even by those who work in or on the German assisted living sector. Senior citizens’ housing is provided by the state or not-for-profits and organised at the sub-national level, so data on the total national supply is not readily available. But there is a significant supply of this type of housing: the total number of units is likely to be at least 100,000, and possibly a lot more than this.

We estimate the size of the for-profit assisted living sector in 2021 to be roughly €2 billion. 

The growth rate in the supply of service residences averaged 19% between 2010 and 2020.* However, the growth rate slowed between 2019 and 2020, reaching only 9.5%. More than half of these new projects came from the for-profit sector. 

There are currently 750 projects in development, the majority of which are from for-profit providers. The growth rate in overall supply will be between 5% and 9% for 2021. The growth rate in for-profit supply will be between 11% and 15%. Revenue should grow roughly in line with these figures.

It is perhaps unsurprising that growth in new builds has slowed during the pandemic, and that it hasn’t yet returned to pre-pandemic levels. However, assuming vaccination progresses smoothly, growth for the sector as a whole could return to 15+% from 2022 onwards.

 

Demand vs. supply

Unsurprisingly for Europe’s most populous country, Germany has Europe’s largest elderly population, with 9.5 million people aged 75 or older as of 2019. This figure is set to grow by almost 900,000 by 2025. Even with the rapid rate of expansion in supply, demand is growing even faster in most places. 

The provision rate (the amount of assisted living capacity relative to the number of 75+ year olds) for the entire country is about 4% as of 2021. It varies, however, by city, ranging between 2% and 8%: in 2020 the highest provision rates were in Bonn (7.7%), Nürnberg (6.9%) and Stuttgart (6.8%), whilst the lowest rates were in Duisburg (2.3%), Bielefeld (2.5%), Berlin (2.8%) and Köln (2.9%).*

The provision rate for for-profit assisted living only is around 1% in most cities and never higher than 3.2%.*

 

Private vs. public pay

Whilst the cost of care is covered by national insurance, in contrast with nursing homes the state is not obliged to cover accommodation costs for assisted living. However, the average German pension is only around €800 per month, which means that at least 50% of retirees require additional welfare to cover their living expenses.

Since for-profit providers have focused exclusively on the upper end of the market to date and local authorities are not willing to pay for assisted living accommodation that is substantially higher in cost than regular accommodation, the for-profit sector currently only services private pay customers. This could change in the future, however, if for-profit providers decide to invest in more affordable assisted living.

 

Market structure

The German assisted living sector is much less concentrated than the French sector: the top ten for-profit providers in terms of number of residences only account for about 25% of the total number of for-profit service residences. 

The majority of the supply is provided by companies that operate only one or two residences. Whilst a lot of these are small family-owned companies and not-for-profits, some of them are much larger (sometimes international) companies that have only invested in a small amount of assisted living in Germany to date, but are more active in other areas such as nursing homes and/or have a larger stock of assisted living accommodation outside of Germany. Nordic company Hemso, for example, only has about 350 assisted living flats in the whole of Germany.

 

Price and product

The price that assisted living customers pay per square metre is generally higher than the price that is paid for regular accommodation, and this is especially the case for assisted living accommodation provided by for-profit companies. Part of the reason for the difference is that it is more costly for developers to provide (due to there being a higher risk for developing accommodation specifically for elderly people as well as the fact that assisted living apartments are generally smaller whilst having fixed costs for amenities). But the abundance of demand relative to supply has also meant that for-profit providers have been able to raise prices well above the break-even point. Currently there is no assisted living provided by the for-profit sector that is affordable for the majority of German retirees.

The average cost of monthly rent for regular accommodation in Germany is around €10 per square metre (according to Statista it was €9.88 for new builds and €8.08 overall in the first quarter of 2020), whereas for for-profit assisted living it is around €30.* Assisted living flats in Germany are slightly smaller than regular flats on average at 24-50 square metres for a one-bedroom apartment and 40-70 square metres for a two-bedroom apartment.*

The cost of rent in service residences in Germany varies significantly based on location: in Dortmund the average rent for a one-bedroom studio is around €750, whilst in Munich it is around €3,400* (as is the case in France, this includes a minimum level of services). Residents can spend up to €1,000 per month on services in addition to this. 

The majority of for-profit service residences provide communal areas (71%), balconies (70%) and entertainment areas (57%). A significant minority have a restaurant (37%), gym (28%) and physiotherapy room (27%). Only the most luxury residences provide swimming pools (10%), saunas (9%) and spa areas (4%).*

 

Profitability and future opportunities

According to a report by Savills, Germany has the highest senior housing opportunity index out of all EU countries.

Assisted living has one of the highest prime net yields of all types of real estate assets in Germany; in 2019 it was 4.5%.*

According to Jens Nagel of Hemso, REITs generally only need to earn around €15 per square metre from assisted living accommodation to make a profit, rather than the €30+ they currently aim for. Therefore, there exists a considerable opportunity for for-profit provision of more affordable assisted living accommodation to service demand from the 90% of German retirees who are currently excluded from the for-profit market, especially in places where the provision rate is low. Furthermore, Nagel thinks local authorities may be willing in many cases to cover the cost for assisted living accommodation priced around the €15 mark (for poorer retirees who require additional help to cover their living costs). So aiming for prices in this region would open up the market to a much wider demographic.

Most of the recent investment has gone into developments outside of the largest cities, due to cheaper land and lower existing supply.* This is also the case with projects currently in development: less than 15% of the projects in the pipeline are being constructed in the top 20 cities with the highest elderly population.*

 

Policy support

Unlike nursing homes, the state is only obliged to cover the costs of care for assisted living residents. Rent is covered by the individual, except in cases where the individual is deemed unable to pay.

Assisted living doesn’t face as many regulatory constraints as nursing homes in Germany. As with nursing homes, assisted living is regulated at the local authority level.

 

*Source: MoZaïC Asset Management’s Senior Living Market Report on Germany, lead by Frédéric Dib (CEO at MoZaïC) and Samuel Vetrak (CEO at BONARD), with additional information provided by MoZaïC and BONARD via Frédéric Dib 


 

Assisted Living: Italy

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 848994100100100140196
For-profit sector (€m) 848994100100 (100)100 (100)140 (140)196 (196)
For-profit growth % 6%6%6%6%0% (0%)40% (40%)40% (40%)40% (40%)
Public/non-profit sector (€m) 00000000
Italy: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Domitys €3.5m €245m 3.5%
2 Korian Group €2.7m €3.9bn 2.7%
See all operators
€ million 

Introduction

The assisted living sector in Italy is currently very undeveloped, with provision from only a few small family-owned businesses until recently and no involvement of the state at all. However, two large French players - Domitys and Korian - have recently opened up assisted living sites in the country and both plan to expand provision in the coming years. Despite a slowdown in new developments since the pandemic, there remains a significant opportunity for growth in the sector.


Industry size and growth rate

There are currently only 3,000 - 4,000 assisted living dwellings in the entire country. All of these are provided by private for-profit companies. There appears to be no public sector provision of assisted living in any form.

Andrea Minciarelli from Your Care Consult thinks that in ten years time the for-profit sector could be as developed as France’s, with 100,000+ dwellings. 

We estimate the total annual revenue for the for-profit sector in 2020 to be no more than €100 million. This could grow to €2.5 billion or more by 2030, according to Korian’s Italy CEO Mariuccia Rossini. To reach this level, the sector will have to increase supply by over 40% every year between now and then.


Demand

Despite limited awareness of the assisted living option currently, there is potential for large increases in demand in Italy in the coming years. Korian’s Italy CEO Mariuccia Rossini said: “It is a market of unlimited potential for entrepreneurs who understand the needs of senior citizens”.

Italy has not only the oldest population in Europe, but the second oldest in the world: 23% of its population were 65 or older in 2020, comprising around 14 million elderly people. This figure is set to grow to about 16 million by 2030, when 27% of the population will be over 65. Currently there are only around 300,000 nursing home beds in the country and almost no assisted living accommodation, meaning there is capacity for only around 2% of the country’s entire elderly population in the elderly care sector.


Elderly Italians have traditionally been very attached to their homes and have typically been looked after by their children who often live with them. But Minciarelli thinks this is changing as cohabitation between generations is declining. 

According to Minciarelli, the big opportunity lies at the higher end of the market with high quality and relatively luxury provision in urban areas.


Supply

Until recently, the only assisted living that existed in Italy was provided by small family-owned nursing home companies; these companies sometimes offer a few separate apartments adjacent to their nursing homes for elderly people who are able to live independently. According to Minciarelli, as of 2021 there are only around 30 or 40 of these combined nursing-home-and-assisted-living complexes across the country.

But then in 2015 Domitys entered the market, opening a 124-apartment complex in Bergamo, Lombardia, with the help of property developer Immobiliare Percassi (who owns the real estate). 

Since then Korian have also entered the scene, and have opened three sites and around 100 apartments in total. To date, Korian and Domitys are the only major companies providing assisted living and the only companies providing ‘pure’ assisted living complexes (not combined with a nursing home).


All of the new assisted living accommodation that has been added to existing supply over the past couple of years has come from Korian and Domitys. There is a significant opportunity for other major international players to enter the market.


Rental vs. sale

Properties are almost always rented, rather than sold. However, Korian provides properties for sale as well as rent.


Prices and profitability

Prices are usually higher than regular private accommodation, but lower than nursing homes. The basic rate (for rent plus minimum services) for a single apartment is around €1,500 - €2,000 per month, depending on location. Residents can spend up to €1,000 per month on top of this on additional services.

Korian receives between €20,000 and €35,000 per apartment annually. Its EBITDAR margins are between 30% and 55%. However, as is the case in France, it does not own the properties that it rents out, so profit (EBITDA) margins will be a lot lower once rent is accounted for.


Policy 

Currently there is no policy support or regulation specifically aimed at assisted living, either at the regional or national level. No subsidies are provided either for construction of assisted living accommodation or for the services that assisted living companies provide. There is an on-going policy debate about how to define and categorise the sector, but this is as far as government involvement has gone to date.

Assisted Living: Netherlands

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 480480480480480480480480
For-profit sector (€m) 100100100100100 (100)100 (100)100 (100)100 (100)
For-profit growth % 0%0%0%0%0% (0%)0% (0%)0% (0%)0% (0%)
Public/non-profit sector (€m) 380380380380380380380380
Netherlands: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Cardia hart voor zorg €35.6m €35.6m 35%
2 Korian Group €33.4m €3.9bn 33%
3 Domus Magnus €31.8m €31.8m 31%
4 De Leyhoeve €2.2m €3.3m 2.2%
See all operators
€ million 

Introduction

The for-profit assisted living sector in the Netherlands is currently very small and undeveloped, with only a handful of providers. There are several hundred retirement villages across the country, but almost all of them are run as cooperatives. The for-profit sector has seen some new developments since 2015, but growth has slowed in the last couple of years. Despite difficulties with regards to sourcing land and a generally unsupportive policy environment, there is an opportunity for further development of the sector in the years to come.
 

Definition

We define assisted living as any accommodation in a communal complex specifically for elderly people where there is some provision of care or support but residents live in their own private dwelling. 

The main distinction in the Dutch market is between ‘service flats’, ‘verzorgingshuizen’ and sheltered housing provided by social housing associations. Service flats are essentially what the French call ‘service residences’; they are groups of flats exclusively for elderly people who are not so incapacitated that they require extensive medical care but may require some support and they have some level of amenities such as restaurants and swimming pools. Verzorgingshuizen are much more similar to nursing homes. They are for people who aren’t able to live fully independently and need a much higher level of support. They are distinct from nursing homes, however, as residents live in a private apartment with their own kitchen. 

In practice, many providers combine verzorgingshuizen with nursing homes in the same complex.


Industry size and growth rate

There are roughly 98,000 assisted living dwellings in the Netherlands. Around 95,000 of these are in the not-for-profit sector and the remaining 3,000 are in the for-profit sector. There aren’t many new developments in construction currently.

We estimate the annual revenue of the Netherland’s entire assisted living sector to be around €480 million in 2021. €100 million of this is revenue for the profit sector, and the remaining €380 million is revenue for the not-for-profit sector. Because of the current lack of new developments, this figure will not grow substantially over the next two years.

About half the assisted living dwellings in the not-for-profit sector are part of retirement communities that are run as cooperatives, in which the village is owned collectively by the residents who agree to share between them the cost of services (which are provided by external companies). Our revenue estimates do not include these properties.


Supply

There are only a handful of for-profit providers: Domus Magnus, de Leyhoeve, Martha Flora, September, Dagelijk Leven, Herbergier and Stepping Stones (now owned by Korian). Many of these companies are also involved in the nursing home sector. These providers often combine assisted living and nursing homes in the same complex. They usually rent, rather than sell, the properties to residents.

There are around 53,000 sheltered housing dwellings provided by two major social housing organisations: Habion and Woonzorg Netherlands. Habion provides about 11,000 dwellings and Woonzorg provides around 42,000.

There are around 42,000 service flats spread across 360 retirement communities which are all run as cooperatives. These are: 

  • financed by community banks

  • Generally sold to the occupier

  • Residents have to participate in services fee

  • Run as cooperatives

  • Heirs have to sell when occupier dies

  • Some are sold to investors. Some have moved to ‘hybrid’ form where investor buys up apartments

  • Not consolidated

For all types of assisted living, healthcare services always have to be provided by an external provider. 
 

Price

Residents in for-profit assisted living accommodation can pay anywhere from €1,500 to €3,500 per month for rent and services combined. 


Policy support

Since 2015, government policy has been geared towards getting elderly Dutch people to stay at home and receive domiciliary and medical care there, which the government funds. This is cheaper than paying for them to stay in nursing homes.

Up until 2015, the state-funded both nursing homes and the more intensive side of assisted living (verzorgingshuizen). In 2015 the government eradicated free housing for elderly people and so stopped providing funding for assisted living. Verzorgingshuizen have largely disappeared since (some sites were converted into nursing homes). 

 

Profitability and opportunities

From real estate perspective, investing in regular commercial accommodation is generally more profitable than assisted living accomodation, according to Willem Koelewijn (a consultant who works on the sector). As is the case in other countries, there is a lower risk in investing in the development of accommodation that isn’t specifically for elderly people. One way around this issue is to make use of the asset-light model used in other continental countries such as France and Switzerland, where operators don't own the properties they rent out; they are owned instead by a real estate investor (REIT) who rents them to the operator. Using this model requires much lower starting finance and can yield higher returns on investment.

A major barrier to the development of new retirement villages has been the difficulty in sourcing land. This is in part because the Netherlands is a small and densely populated country, but it isn’t helped by regulatory barriers for planning new developments.

Despite the hurdles, multiple companies have been able to turn a profit and the sector is far from saturated. Rune Aresvik and Willem Koelewijn, two consultants who work in the sector, both believe there is significant scope and opportunity for the development of new for-profit retirement villages across the country.

Assisted Living: Spain

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 8.28.699.51010.51111.6
For-profit sector (€m) 8.28.699.510 (10)10.5 (10.5)11 (11)11.6 (11.6)
For-profit growth % 5%5%5%5%5% (5%)5% (5%)5% (5%)5% (5%)
Public/non-profit sector (€m) 00000000
Spain: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Caser Residencial €6.3m €72.2m 63%
2 Residencia Los Almendros €1.5m €1.5m 14%
See all operators
€ million 

Introduction

The assisted living sector in Spain is very small and undeveloped. There are only a handful of operators involved in the sector and none that provide more than a couple of hundred dwellings. 

As is the case in other southern European countries, this can be linked to lower incomes and a culture that prefers intergenerational cohabitation to a far greater degree than is the case in the richer north. But the culture is changing and Spain is already one of Europe’s most popular locations for EU citizens to retire in. Combine this with the rapidly ageing population in Spain and the EU as a whole and it is clear that there is a lot of potential for future development as Spain becomes Europe’s Florida. 

 

Definitions

We define assisted living as any accommodation in a complex exclusively for elderly people where there is some provision of support or services but residents live in their own private dwelling.

As is the case in many other countries, there is an important distinction between more luxury retirement villages where a high level of services are provided and more basic sheltered housing. There is a small amount of sheltered housing in Spain; the Spanish name for it is ‘
pisos tutelados’. According to JLL there are only around 5,000 pisos tutelados across Spain, about 90% of which are provided by the state and the remainder are provided by private companies. Pisos tutelados are for people with low incomes only and the state either fully funds or heavily subsidises the cost of rent (even when it is supplied by the private sector). Despite mostly being occupied by elderly people, they are not in general age exclusive, but open to younger people with disabilities as well. Therefore we do not include pisos tutelados in our analysis.
 

Industry size and growth rate

As of 2021, there are only around 10-15 retirement villages across the country according to JLL. These sites have anywhere from 50 to 250 dwellings each. The total number of assisted living dwellings in Spain is no more than 2,000.

We estimate the annual revenue for the entire sector to be only around €10 million. Since only for-profit companies are involved in the sector, the figure for annual for-profit sector revenue is the same. This estimate is for operations (i.e. rent and services) revenue only; it doesn’t include revenue from property sales. The figure is much smaller than the annual revenue of some other countries that have sectors of a similar size (such as Italy) due to the fact that the large majority of assisted living dwellings are sold rather than rented to the occupier in Spain.

There isn’t a large amount of assisted living accommodation currently under construction in Spain as of April 2021. According to JLL, there is one new site in development in Madrid. There is also an assisted living complex in Valencia that is currently being expanded. The supply of assisted living could grow by around 5% per year over the next few years. Annual revenue for the sector as a whole should grow by at least this amount. If the rental sector grows more rapidly than the for-sale sector then revenue (for operations) will grow at a faster rate than the supply of dwellings.


Demand

On the demand side, there are three factors which help explain why the sector has seen minimal development to date: 

  1. 90% of older people own their own home and are reluctant to sell so they can pass it on to their children

  2. Low pensions

  3. Cultural factor: closeness and often cohabitation between generations plus good weather makes it easy to socialise outside

But demand is starting to grow according to Angel Giro Camacho from Seniors Residencias. He thinks the sector could be well developed in 10 or 15 years. 

There are three factors that may help the sector grow:

  1. Demographic shifts. Spain has a large and rapidly growing elderly population: people aged 65 and over currently make up 17% of the population (about seven million people), but according to the Spanish National Statistics Office (INE) they will make up around 30% of the population by 2050.

  2. Cultural shifts. Giro Camacho says his generation has less of a desire to pass on all their assets to their offspring. And the culture of cohabitation is also changing.

  3. The freedom of movement that the EU allows combined with Spain’s favourable climate. There is a significant potential for demand from outside of Spain. Spain is not only one of Europe’s most popular holiday destinations, but also the most popular destination for expat retirees from across the EU. In particular there is significant potential demand for assisted living accommodation located along the sunny coastal regions that are popular with foreigners.

Factors 1) and 3) may reinforce each other since the EU as a whole also has a rapidly ageing population. According to data from Eurostat, in 2018 there were 101.1 million people aged 65 years or or over in the EU, roughly 20% of the total population. This figure will increase by about 50% by 2050, when the over 65 population will make up around 29% of the population.

Angel Giro Camacho thinks the biggest potential for future development lies in the rental sector and in urban areas. As is the case in other developed countries, sluggish median wage growth in combination with rising house prices (which despite its housing boom Spain has not been totally immune from) over the past decades mean that many younger people will continue to rent throughout their lives. Seniors Residencias are looking at investing in rental assisted living in big cities like Madrid where many people already rent. 

 

Supply

As of 2021, all of the supply of assisted living is from for-profit providers; there is no state or not-for-profit involvement in the sector.

The sector is currently divided between provision that is marketed at Spaniards and located in larger urban areas such as Madrid and provision which is marketed at foreigners and located on the coast in places like Alicante, e.g. Forum (in Valencia) and Patricia (close to Benidorm). Investors and big international elderly care players are looking at both parts of the sector as areas where there is significant potential for future development.

As is the case in other countries, many providers are also involved in the nursing home sector and the larger of these companies only provide a very small amount of assisted living capacity relative to their nursing home provision. According to Javier Fernández Álvarez from Roland Berger, to date there are no companies that exclusively focus on assisted living in Spain.

 

Major players

There are no providers that provide more than a few hundred dwellings. The largest operators are Ballesol, which operates 350 apartments across nine locations, and DomusVi, which operates 207 assisted living apartments across two complexes (one in Girona and one in Sevilla) under the name Adorea.

Senior Residencias (now owned by Korian) has only one assisted living complex (with 48 apartments); this site is combined with a nursing home. They plan to build a new site in Madrid at some point in the next five years.

 

Rental vs. sale

According to JLL, about 90% of assisted living accommodation is sold, rather than rented, to the occupier. However, they say that the for-sale model that Spanish assisted living companies usually follow has faced some issues. Companies usually sell the property in full and as a freehold. This has created problems when the occupier dies and their family is left with a property that is difficult for them to sell given the age exclusive requirements. At least one company has developed a remedy for this; they use a model in which the property is sold under a leasehold agreement whereby the occupier owns it until their death, at which point it is returned to the operator. 
 

Prices

The sector faces strong competitive pressures from suppliers of regular accommodation: assisted living providers can’t make living in their communities significantly more expensive than living in regular accommodation, otherwise they risk losing customers.

For the rental sector, rent alone is usually at least €1,100 per month. Charge for minimum services is typically around €200 per month. Additional services can be added at extra cost by choice. In general, residents who are renting will typically spend anywhere from €2,000 to €4,000 per month. The variability is mostly down to differing rents in different parts of the country.

 

Profitability

Assisted living generally isn't much more profitable than nursing homes in Spain. EBITDA margins are typically around 15% - 20%, according to JLL.
 

Policy 

There is currently no regulation either at the local or national level that is specifically aimed at assisted living. Some assisted living villages use nursing homes or pisos tutelados licenses to get around this. Most operators are keen for the government to develop regulation for the sector.

Assisted Living: Switzerland

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 1,1601,2081,2581,3101,3651,4331,5051,580
For-profit sector (€m) 8158579009501,000 (1,000)1,060 (1,060)1,124 (1,124)1,190 (1,190)
For-profit growth % 5%5%5%5%5% (5%)6% (6%)6% (6%)6% (6%)
Public/non-profit sector (€m) 345351358360365373381390
Switzerland: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 Tertianum Group €392m €491m 39%
2 Maison de Retraite du Petit-Saconnex €25.8m €36.8m 2.6%
3 Casa Gupf €4.9m €4.9m 0.49%
4 Almacasa-Zentrale €3.8m €6.2m 0.38%
5 Di Gallo €1.8m €5m 0.18%
See all operators
€ million 

Introduction

The assisted living sector in Switzerland is much more developed than that of most other European countries. However, some analysts believe there are limits to how much potential there is for further expansion, despite there only being capacity for around 5% of seniors currently. 
 

Definitions

We define assisted living as any accommodation in a complex exclusively for elderly people where there is some provision of support or services but residents live in their own private dwelling. In Switzerland there is a significant number of age exclusive retirement communities where no support or services are offered; these are not included under our definition.

 

Industry size and growth rate

A 2016 academic article on the sector1 found that there were 843 retirement communities across Switzerland and that there were 16,000 reported dwellings located in about 500 of these communities. However, the remaining 343 sites didn’t specify the number of apartments they contained, so the total figure for the number of apartments specifically for elderly people may have been around 25,000 or higher. However, only 75% of these are in communities that offer any support or services at all (the remainder were age exclusive sheltered-housing type accommodation without even emergency 24/7 support on offer) meaning there were around 19,000 assisted living dwellings in 2016. There has been some new developments since then, so the number of assisted living dwellings may be around 22,000 - 25,000 as of 2021. Roughly 70% of these are provided by for-profit companies. Of the remaining 30%, the vast majority are provided by the state and a small number are provided by not-for-profits.

We estimate the annual revenue for the entire sector was around €1.365 billion (1.5 billion CHF) in 2020 and the revenue for the for-profit sector was around €1 billion (1.1 billion CHF). The revenue of the entire sector will grow at a rate of anywhere between 2% and 6% per annum over the next ten years, according to PwC. Stefan Buser (of Buser Management) predicts revenue will grow by around 5% per year over the next few years. Most of the new developments are taking place within the for-profit sector. The for-profit sector may grow at around 6% per year over the coming years.

 

Demand and supply 

The 2016 article1 collected data from 10 cantons which suggested there was capacity for 6.3% of over 80s (almost 30,000 people) in the total stock of retirement dwellings. However, a quarter of these dwellings are in communities that don’t provide any support or services, so there was capacity for only around 5% of over 80s in the assisted living sector. The stock of assisted living accommodation and the over 80 population have both grown by roughly 10% since 2016, so as of 2021 there is still capacity for only around 5% of Switzerland’s over 80 population in its assisted living sector. 

The provision rate varies to a significant degree by region. A 2018 academic article initiated by CURAVIVA, Senesuisse, Pro Senectute Switzerland and Spitex Switzerland2
found there was capacity for around 13% of people aged 80 and over in the canton of Basel-Stadt, capacity for 6% in the canton of Neuchâtel, and capacity for only around 2% in the cantons of Glarus and Jura.

Despite the low level of capacity in certain regions of Switzerland and the country's rapidly ageing population, Daniel Stocker from JLL believes there is limited scope for significantly increasing the size of the sector in the years to come. The reason he cites is the high cost of service labour in Switzerland combined with the high level of home-ownership amongst retirees and the well-developed domiciliary care sector. In particular, he believes there is very little potential for new developments at the more luxury end, since most retirees who can afford it have owned their own property for decades, during which time it has significantly increased in value, and are reluctant to move out. They would rather stay put and receive domiciliary care (which health insurers foot part of the bill for) at home, which generally works out cheaper.

 

Private vs. public pay

Unlike nursing homes, there the state is not obligated to cover the cost of assisted living. Currently there is general (not specific to assisted living) funding from the state for low-income people for rent up to 1,300 CHF (the precise amount depends on the location). When healthcare and living costs are included the maximum allowance can be up to around 3,000 CHF. This is not enough to cover all expenses in retirement communities.

 

Rental vs. sale

The vast majority of assisted living accommodation in Switzerland is rented, rather than sold, to the occupier.

 

Market structure and major players

As is the case in other countries, most of the major for-profit providers of assisted living are also involved in the nursing home sector (the only notable exception to this is Bonacasa, which focuses on assisted living exclusively). In fact, most nursing homes providers also provide assisted living accommodation and often do so within the same site. This allows residents to be moved easily from assisted living to nursing home accommodation when they become more dependent. The Swiss assisted living sector therefore includes largely the same players as the nursing home sector. 

The market is not concentrated: by far the largest provider is Tertianum, which only has around 2,000 assisted living apartments (about 8% of the overall supply). The only other player with a significant share of the market is Senevita, which has around 1,300 apartments. 

Then there are a handful of medium-sized players: Di Gallo, Bethesda, Oase, Sensato and Solviva. These companies provide a combined total of around 5,000 - 6,000 apartments. 

The remaining 60% or so of the supply is provided by small family-owned businesses that operate one or two assisted living sites and provide only around 50 flats each (again, often in combination with a nursing home).

 

Prices

The price of assisted living varies to a significant degree based on location and the number of services provided. Typically, residents in for-profit assisted living accommodation spend around 4,000 - 8,000 CHF (€3,640 - €7,280) per month. They spend around 2,000 - 3,000 CHF (€1,820 - €2,730) on rent (which is about 1,000 CHF more than residents in regular accommodation spend) 1,000 CHF + (€910+) on services and around 1,000 CHF on taxes and medical support. 

 

Profitability

EBITDA margins can be as high as 10% or more for large, well-run sites. The average EBITDA margin is likely around 5-6%, according to Buser.

As is the case in France and Germany, operators prefer an asset-light business model in which they don’t hold ownership of the property at any point; it is owned by a real estate investor (REIT) who they rent it from. EBITDAR margins are therefore much higher than EBITDA margins, since a large part of operators' cost will be rent.

According to Buser, the reason companies use this asset-light model is that it requires much smaller amounts of starting financial capital and typically yields significantly higher returns on investment, and yields these returns faster. Purchasing the large numbers of properties that assisted living communities require is expensive; so expensive that even with high rates for rent, it isn’t actually that profitable (especially in cases where property prices are not rising). 

 

Policy support

There are far less restrictions on the assisted living sector than there are on the nursing home sector; new supply does not have to be licensed by the cantons. 

Policy for assisted living is organised at the local government level and so varies to a significant degree by region. 

The state does not fund the construction, rental or service provision for private assisted living, but does provide funding for the medical care that residents receive (up to 100 CHF per hour). There is currently an ongoing policy discussion about whether the state should provide funding for assisted living specifically, as it does with nursing homes.

Currently there is no regulation specifically aimed at the sector at the national level. However, as of 2018, seven cantons had developed regulation for the sector.2

In Switzerland it is illegal for foreigners to invest in residential property. This law does not apply to commercial properties, however. Assisted living accommodation is in a grey zone and is sometimes counted as residential and sometimes not, depending on the level of services that are offered and the canton.

 

References

  1. Werner S, Kraft E, Mohagheghi R, Meuli N, Egli F. Angebot und Inanspruchnahme von intermediären  Strukturen für ältere Menschen in der Schweiz (2016)

  2. Zitation des Berichts: Imhof L., Mahrer-Imhof R. (2018). Betreutes Wohnen in der Schweiz:  Grundlagen eines Modells. Studie im Auftrag von CURAVIVA Schweiz, senesuisse, Pro Senectute Schweiz, Spitex Schweiz. Winterthur: Nursing Science & Care GmbH. (2018)

Assisted Living: United Kingdom

(Pre-COVID estimates in brackets) 2016 2017 2018 2019 2020 f/c2021 f/c2022 f/c2023 f/c
Total market size (€m) 6,7906,8606,9307,0008,207.98,2908,3728,454.1
For-profit sector (€m) 1,1251,2401,3601,5001,758.8 (1,758.8)1,934.7 (1,934.7)2,128.2 (2,128.2)2,345.1 (2,345.1)
For-profit growth % 10%10%10%10%0% (0%)10% (10%)10% (10%)10% (10%)
Public/non-profit sector (€m) 5,6655,6205,5705,5006,449.16,355.36,243.96,109
United Kingdom: For-profit Assisted Living market share of biggest operators
Rank Company 2020
Revenue in this sub-sector
2020
Total revenue
market share %
1 McCarthy & Stone Retirement Lifestyles Ltd €842m €842m 47%
2 Audley Villages €75m €75m 4.3%
3 Beechcroft €49.8m €49.8m 2.8%
4 Lifecare Residences Ltd €35.2m €35.2m 2%
5 Retirement Villages Group Ltd €18.2m €18.2m 1%
6 Care Outlook €17.1m €17.1m 0.97%
7 Precious Homes €16.8m €16.8m 0.95%
8 Home From Home Care €14.5m €14.5m 0.83%
9 Eden Futures €9m €22.4m 0.51%
10 Inspired Villages €8.8m €8.8m 0.5%
See all operators
€ million 

Introduction

Whilst the UK has a large stock of sheltered housing for elderly people, more luxurious retirement villages are a relatively new phenomenon. But unlike sheltered housing, the retirement village sector is growing rapidly. The majority of the currently existing retirement village supply is provided by the not-for-profit sector and rented at a heavily subsidised rate under affordable rent schemes. But most of the new investment is going into the for-profit sector, which is for the most part following the owner-occupier model common in other anglo-sphere countries, rather than the rental model which exists in the rest of Europe. But there is also a small and growing supply of retirement village accommodation that is following the rental model within the for-profit sector, and some analysts think this could come to dominate the market in the future.

 

Definitions

We define assisted living as any accomodation in a communal complex specifically for elderly people where there is some provision of care or support but residents live in their own private dwelling. 

Aside from nursing homes and community living, there are three housing options for elderly people in the UK:

1. ​Age exclusive housing: housing exclusively for elderly people with no care, support or other services provided.  

2. Sheltered housing: housing exclusively for elderly people with some level of on-site (emergency) support service but no provision of day-to-day care or luxury amenities.

3. Housing with care (sometimes called ‘extra care housing’): housing exclusively for elderly people with both support and day-to-day care provided, and in some cases more luxury services and amenities provided as well

The term ‘assisted living’ when used in the UK usually refers to the housing with care category exclusively. However, we define the term broadly to include both sheltered housing and housing with care. Age exclusive housing is not included since there is no care or support provided.

The ‘housing with care’ category can be split into residences that provide luxury services and amenities (such as restaurants, swimming pools, tennis courts and saunas) and those that are more basic and similar to sheltered housing. Residences which fall under the former category are commonly referred to as ‘retirement villages’ or ‘retirement communities’.


Sheltered housing consists of apartment blocks or groups of houses that have communal areas where people live mostly independently but have access to basic services such as 24/7 emergency assistance and sometimes there are group activities organised for them. Services such as day-to-day care and assistance are not provided (although residents can receive this from an external source). Amenities such as restaurants, gyms and swimming pools are almost never provided. 

According to government policy, ‘assisted living’ complexes (by which they mean housing with care) are in an entirely separate category from sheltered housing, with separate regulation; unlike sheltered housing, ‘assisted living’ accommodation is regulated by the Care Quality Commission (CQC), who inspect facilities and provide ratings. 

 

Industry size and growth rate

According to data collected by the Elderly Accommodation Counsel (EAC), as of January 2021 there are 602,474 assisted living dwellings in the UK.

Out of a total of 751,503 dwellings that are exclusively for elderly people, 149,029 fall under the age exclusive housing category, 86,873 fall under the housing with care category and the remaining 515,601 are sheltered housing.


The number of housing with care dwellings that fall into the more luxury retirement village category is about 65,000. It is this part of the sector that is receiving the most new investment and growing most rapidly. According to the Associated Retirement Operators Operators (ARCO) the number of retirement village dwellings could grow to 250,000 by 2030. 

Only about 10,000 of the existing stock of retirement village dwellings are provided by the for-profit sector. The remaining 55,000 or so are provided by not-for-profits.

Out of the stock of 515,601 sheltered housing dwellings, 124,719 are provided by local authorities, 290,386 are provided by not-for-profits and 100,496 are provided by the for-profit sector.

There are a total of around 135,000 dwellings in the for-profit assisted living sector (including both sheltered housing and housing with care).

We estimate the annual revenue for the entire assisted living sector (including public, not-for-profit and for-profit provision of both sheltered housing and housing with care) to be around £7 billion. This figure comprises £5 billion revenue from the sheltered housing sector and £2 billion from the housing with care sector.

We estimate the annual revenue for the for-profit assisted living sector to be £1.5 billion. This figure comprises £1.2 billion revenue from the sheltered housing sector and £300 million from the housing with care sector.

According to a 2020 report by Cushman and Wakefield, between 2015 and 2019 developers completed an average of 7,600 assissted living units per year.
According to Knight Frank, there were 9,500 new senior living homes completed in 2019 and 11,500 were planned to be completed in 2020.The majority (about 60%) of the new dwellings completed since 2015 have been housing with care units, and the remainder are sheltered housing units. Whilst the housing with care sector is currently much smaller, it is growing at a much faster rate: the sheltered housing stock has been growing at no more than around 1% per year whilst the housing with care sector has been growing at around 10% or more per year. This looks set to continue in the years to come.

Annual revenue figures should grow roughly in line with these figures on average. However, for aggregate housing with care revenue there may be an increasing amount of variability in the figures from year to year as for-profit provision overtakes supply from not-for-profits, due to the fact that a lot of for-profit retirement village
’s short-term revenue comes from property sales.

 

Demand

Whilst some people think that UK retirees are not like Americans, Australians or New Zealanders and that they are unwilling to embrace retirement village living, there is little evidence that this is, in fact, the case. Companies such as Audley and Richmond Villages have had no trouble finding customers. A survey conducted by Yougov and McCarthy & Stone found that 33% of over 65s would consider down-sizing and moving into some form of retirement accommodation.

The issue is rather one of supply;
the currently existing 65,000 retirement village dwellings in the UK, with an average of 1.25 residents per unit, provide only enough capacity for 0.6% of the UK’s over 65s.

The UK population is ageing rapidly: the number of over 65s will increase by over 40% from what it was in 2018 by 2043. And baby-boomers are culturally very different from the generation that preceded them. 

Roughly 70% of UK retirees are home-owners. Combine this fact with the astronomical rises in housing costs in the UK over the past few decades and it is clear that there is a very high ability to pay for retirement community accommodation amongst those who are currently retiring and those who will retire over the coming years, assuming they are willing to sell or rent out their property.

 

Supply

About 80% of the current supply of assisted living accomodation (all types) is provided by the state or not-for-profits.

Roughly 85% of the existing supply of assisted living accommodation is sheltered housing. Sheltered housing is usually provided by local authorities or housing associations (not-for-profits) and rented at a highly subsidized rate, with priority given based on need. According to the EAC, as of January 2021 there are 515,601 sheltered housing units in the UK, 124,719 (24%) of which are managed by local authorities, 290,386 (56%) are managed by not-for-profit organisations and the remaining 100,496 (19%) are managed by for-profit companies. For-profit sheltered housing is usually sold rather than rented to the occupier. Sheltered housing sites usually have 40-60 dwellings.

The remaining 15% of assisted living accommodation is housing with care, and about 75% of the housing with care accommodation is in more luxury retirement villages. About 75% of these retirement village dwellings are provided by not-for-profits either under affordable rent schemes (in which the vast majority of rent is subsidised) or under shared ownership schemes. However, around 25% of the current provision is sold at an unsubsidised rate to the occupier. The majority of the dwellings in this 25% are provided by for-profit companies. The for-profit provision amounts to about 10,000 of the total 65,000 dwellings. 
 

Unlike the rest of Europe, the majority of the for-profit provision of assisted living accommodation in the UK is sold to the occupier, rather than rented. Within the housing with care sector, the vast majority (around 90%) of the for-profit provision is sold to the occupier. 

For-profit housing with care providers usually work under a ‘deferred payments’ model in which they retain a minority share in the property (around 20%) when they sell it to the occupier with the agreement that the occupier will pay them a fee when the property is resold. The benefit of doing this for the operator is that they are then guaranteed a future revenue stream of deferred payments, which the seller has to pay to them each time the property is resold. The benefits of this model for the occupier are that they get to buy a property at a reduced price, they don’t have to worry about having to pay for reinvestment in the upkeep of the retirement village, and therefore they don’t have to take on as much risk. The majority of the profit that for-profit UK assisted living companies make in the long-term is from these deferred payments.


There is a small amount of retirement village accommodation in the for-profit sector that is rented rather than sold (around 1,000 units). This part of the sector is also receiving new investment and growing, but not at the same rate as the for-sale sector. Michael Voges from ARCO believes that there is a possibility that this part of the sector could overtake the owner-occupier sector in the future.

Retirement villages usually have 60-250 dwellings per site.

  
Profitability

The amount of profit for-profit assisted living companies make is highly variable, both within companies (from year to year) and between companies. This is because most of the short-term profit assisted living companies receive is from the initial property sale, and how many properties they are selling will vary significantly depending on where the village is in its life-cycle.

For-profit retirement village companies can make anywhere from 10% to 45% margins in terms of pre-tax profit.

For the majority of for-profit retirement village companies which work under the deferred payments model, most profit comes from deferred payments in the long-term (and development in the short-term); sales usually just break even. Audley has managed to make service provision profitable, but most other companies have not been able to.
 

New investment

There is very little new investment going into the sheltered housing sector. This is because the for-profit provision of sheltered housing is mostly sold to the occupier, but sold in full rather than under the deferred payments scheme that for-profit retirement village providers use. There is therefore no possibility for long term revenue streams. Furthermore, property developers prefer to invest in housing that isn’t age exclusive since this carries lower risk and can often be sold at a higher price.

The vast majority of the new investment is going into retirement villages and especially for-profit retirement villages (about 75% of all the new investment in assisted living is going into for-profit retirement villages). For-profit retirement village providers are receiving financial backing from the likes of Schroders, Legal & General, AXA, Royal London (investing in Audley Group) and Goldman Sachs (investing in Riverstone).

£40 billion could be invested in the development of new retirement villages between now and 2030, according to the Associated Retirement Community Operators (ARCO).

 

Policy Support

Whilst there hasn't been much in the way of actual policy proposals to help the sector, the government has expressed that it is keen for the housing with care sector to expand and have released reports on the benefits of assisted living. However, finding sites for new developments is made difficult by strict planning regulations, especially in the South East.

As is the case with other forms of social housing, local authorities have been trying to offload their stock of sheltered housing into the for-profit and not-for-profit sectors for many years now.

 

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