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Real estate

Preparing for the next decade of senior housing investments

Melissa Reagen
Portfolio Manager, U.S. Strategic Alternatives Strategy
Daniel Manware
Director of Research, Real Estate, Americas
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Introduction to senior housing: The number of people entering retirement propelled investor interest in the U.S. senior housing sector over the last cycle. However, many investors and developers beat the stronger demand wave that will materialize over the next 10 years. The population of 75+ year olds is expected to grow 3.7% p.a. over the next decade, compared to 2.0% p.a. growth experienced over the last 10 years. This demographic shift has profound implications for senior housing as this generation will eventually need to look beyond their traditional single-family homes and towards housing facilities with assisted services and healthcare support. However, the growing number of seniors will outpace the number of caregivers available for in-home care. The ratio of caregivers to seniors will drop from 3.5 in 2023 to 2.1 by 2040. This trend is likely to drive more demand for senior housing when seniors can no longer take care of themselves at home. According to the Centers for Disease Control and Prevention, nearly one-fifth of 75+ year olds need assistance with one or more essential activities of daily living, which is a key driver of senior housing demand. With the outsized cost of home healthcare, the senior housing sector serves as a favorable housing option for seniors to age with support and care.

 

In our opinion, the high concentration of obsolete stock creates opportunity to develop the next generation of senior living facilities focused on technology, safety, wellness.

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Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the possible loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Certain products and services may not be available to all entities or persons. There is no guarantee that investment objectives will be achieved.

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