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The oldest real estate investors among you may not be surprised, but one of the most attractive investments in the coming years in Portugal in light of the expected demand and growth – is residences for the elderly.
Usually when the issue of investing in Portugal comes up, we think of standard real estate properties as residential apartments. An article on the Idealista website tells about a real estate sector that has already enjoyed significant growth in Europe. This is an investment in housing for the elderly and elderly population.
The article tells of a study conducted by the commercial real estate giant – CBRE and according to its data Portugal is currently in a deficit of about 4,500 beds in senior homes and residences for the elderly. According to the study, in the next 30 years an additional 55,000 beds will be needed. This type will increase significantly.
Therefore, such an investment may not only yield profits, but also make it possible to invest in health care and provide the appropriate care to the elderly population.
We present to you the main points of the article:
Senior residences: Portugal needs 55,000 more beds
More than 20 projects under construction or in the licensing phase of residences for the elderly in the national market. This emerges from a study conducted by CBRE, a commercial real estate services company and the largest investment company in the world, based in Portugal.
In less than 30 years, more than a third of the population living in Portugal will be consist of the elderly, who will make up about 3.3 million people (about one million more than the 2.3 that exist today). In order to prepare for this demographic evolution, an additional 55,000 beds will be needed in nursing homes, which is half of what it is today, according to the study “Building a Healthier and Prosperous Future” published by CBRE, which highlights the attractiveness of these properties for operators and investors.
A statement issued by the company, states that in order to fulfill this goal and satisfy the needs of the population, greater involvement of the private sector will be needed. The company mentions that a number of foreign residential operators for the elderly have recently entered Portugal and already have homes or a project underway, such as Orpea, Domus Vi, Domitys, Clece and they have joined Portuguese operators, such as UHub, Amera, BF, which are also expanding in this sector.
CBRE’s real estate consultant reveals in a statement that he is aware of more than 20 projects under construction or at the licensing stage, which have a capacity of over 1,500 beds. “Given the shortage of supply, more are expected to appear,” he says.
Housing prices have made it difficult to increase supply
Portugal is currently the third country in Europe with the highest proportion of the elderly population (aged 65 and over) and by 2050 it will be the first. And despite being one of the countries with the highest average life expectancy in Europe, it is also the place with the lowest average in the years of healthy seniors.
The high price of senior homes has been one of the obstacles to supply growth, as explained in the CBRE and noted that now the population is more aware and starting to create complections for the reform.
Prices in private senior homes vary considerably depending on the degree of dependence of the resident, the need for necessary medical care, and additional services (such as leisure activities, hairdressers, etc). The average basic price in a privately run private residence according to the published statement is 1,200 euros, which is a very high cost compared to the average value of retirement pensions, which stands at 5,811 euros per year, i.e. 484.25 euros per month in Portugal and reaches a maximum value of 771.25 euros in Oeiras.
Using the home as a source of income in old age
However, the population of Portugal, especially the middle class, is today more aware of this problem and uses special savings solutions, including efforts to purchase a home, which can be profited from or make money in old age to pay for medical treatments. It is important to remember that in Portugal 75% of the houses are owned by the occupant and the sale or rent will make it possible to return the value of the renovation.
On the other hand, some factors such as security incentives, climate and tax incentives have contributed to the attraction of foreign nationals in retirement to Portugal, which generally have a much higher retirement value than that of the Portuguese. The increase in the number of foreigners living in Portugal can be reflected in the increase in the supply of housing for older and elderly people and in higher quality with a greater supply of equipment and services.
In Portugal, the provision of housing for the elderly population is part of the residential housing for the elderly (ERPI) and is complemented by the National Authority for Continuing Integrated Care (RNCCI) and a number of homes for the independent elderly.
There are currently around 100,500 beds in ERPI, of which only 23% belong to private for-profit entities. In the RNCCI a little more than 10,000 beds were added, more than half of which are managed by Misericórdias.
Opportunity to grow in the sector of real estate of homes and residences for the elderly
According to the World Health Organization, the supply of beds in homes for the elderly should suit 5% of the elderly population. Thus, Portugal today has a deficit of 4,500 beds and by 2050 at least another 55,000 are expected to be created, i.e. half of what exists today. Given the forecast of a population over the age of 80, CBRE believes that needs can be much higher.
Investment in health and active housing for the elderly has grown significantly in many European countries. In Portugal, there is little evidence of real estate transactions already generating income. For example, a number of acquisitions by the French fund Pierval Santé and purchase of Expo Living that combines Residência Montepio Parque das Nações by Square Asset Management.
“However, CBRE believes that the development of new projects and the entry and expansion of a number of operators will increase investment in this type of asset in the coming years, including through forward purchase contracts and forward financing, where the investor agrees to purchase the assets before their completion is completed,” the company said in a statement.
It is important to note that a good investor is a smart investor and for investors, the right investment is a matter of timing. If you are interested in more details and guidance in profitable real estate investments in Portugal, you can contact us in any of the following ways:
info@portpassclub.com | Phone 073-3229414 | Our address: Habarzel 11 Tel Aviv
