European Senior Housing Towards its golden age Eri Mitsostergiou 7 - - PowerPoint PPT Presentation

European Senior Housing

Towards its golden age Eri Mitsostergiou 7 October 2019

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Where to invest? Elderly people and their home Conclusions

Agenda

Senior housing investment

Senior housing investment

A niche, attracting growing investors’ interest

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More than €700m transacted since the beginning of the year, a record high

106 Savills based on RCA

100 200 300 400 500 600 700 800 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Million Euros Q4 Q3 Q2 Q1

Increasingly fuelled by different types of investment

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100 200 300 400 500 600 700 800 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD

Million Euros

Single-property Portfolio M&A Forward Sales

Savills based on RCA

Cross border investments, still limited and mainly coming from Europe

108 Savills based on RCA

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Senior housing Other residential alternatives

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Multifamilly Student housing Nursing care Senior Housing

Senior housing: still a niche

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Over the past five years, senior housing accounted for only 1% of the total residential investment volume. Growing investors’ interest for aged- restricted asset types.

Savills based on RCA

Why investing in senior housing?

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 Portfolio diversification  Relatively non-cyclical  Undersupplied market  Diversified revenue model  Easy potential conversion  Long term strategy  Secured income stream  Strong fundamentals

 Lower fertility rate  Longer life expectancy  Increasing number of divorces  New living arrangements Ageing population Overall lack of housing

… and competitive returns

111 Savills

The prime senior housing yield currently ranges between 3.5% and 5%. Senior housing offers a yield discount of 100bps

• ver multifamily and of

66bps over offices. We expect further yield compression as the sector is maturing.

3.00% 4.15% 3.00% 3.00% 5.25% 3.50% 3.50% 3.50% 4.00% 3.50% 3.75% 3.50% 5.10% 5.00% 3.25% 2.55% 4.25% 4.15% 3.50% 2.75%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Student housing Senior housing Office Multifamily France Netherlands Norway Spain Sweden

Where to invest?

European senior housing opportunity index

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Senior housing opportunity index

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Demographics 50%

Dwelling stock per inhabitant Home ownership ratio House price to rent ratio Housing regulation Past 5-year total investment volume Population (70-79) Share of population (70-79) Forecasted growth of pop. (70-79) until 2028 Old age dependency ratio

Wealth 15% Housing 30% Pensions 5%

Saving ratio Household debt Housing cost burden (65+) Net income (65+) Pension Beneficiaries Old age pensions per inhabitant Anticipated old-age pension Past 10-year increase of old-age pension

23 countries 17 metrics

Germany and France stand out, followed by the UK

114 Savills

Each country backed by different prevailing drivers.  Germany is at the top

• f the demographics

potential.  France: Wealthy and fast growing elderly population.  UK: Strong demographics and matured housing market.

≥ 60 55 - 59 50 - 54 45 - 49 ≤40 No Data Germany 69.2 France 66.5 United Kingdom 59.9 Italy 59.5 Poland 56.6 Spain 55.7 Austria 52.2 Luxembourg 51.3 Netherlands 51.0 Sweden 49.1 Denmark 48.2 Belgium 48.2 Norway 47.7 Ireland 47.4 Czech Republic 46.7 Hungary 46.6 Finland 46.0 Portugal 45.5 Greece 45.3 Slovakia 43.4 Latvia 43.1 Estonia 42.5 Lithuania 39.7

Score out of 100

Beyond the top three countries…

115 Savills AT BE CZ DK EE FI FR DE GR HU IE IT LV LT LU NL NO PL PT SK SI ES SE UK

20 30 40 50 60 70 80 90 40 45 50 55 60 65 70 75 80 85 90 Wealth & Pension scores Demographics score Housing score

Elderly people and their home

Understanding their needs and expectations

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Overall, elderly people feel satisfied with their life

117 Ipsos surveys 2016 and 2018

83% 70%

Happiness Usefulness

24% 59% 15% 2% Yes, very Yes Not really Not at all 75% 74% 65% 63% 73% 82% 84% 86% 79% 60% 65% 70% 75% 80% 85% 90% 15-24 25-34 34-44 45-54 55-64 65-69 70-74 75-79 80+

Age

80% 76%

25% 57% 15% 3% Yes, very Yes Not really Not at all 73% 78% 75% 74% 81% 84% 86% 81% 67% 60% 65% 70% 75% 80% 85% 90% 15-24 25-34 34-44 45-54 55-64 65-69 70-74 75-79 80+

Age

Do you currently feel satisfied with your life? Do you currently feel useful?

They want to enjoy life, whilst anticipating their future needs

118 Ipsos surveys 2016 and 2018

To what extent do the following statements correspond to what you think?

15% 17% 14% 15% 8% 60% 51% 53% 52% 46% 19% 24% 26% 27% 36% 6% 8% 7% 6% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% I try to anticipate for my old age I still love to have fun I feel physically and psychologically fulfilled I take life as it comes by avoiding thinking about tomorrow I have confidence in the future Fully agree Agree Disagree Fully disagree

What would you say regarding you current financial situation?

You can save significant amount of money You can save little amount of money Your income just allows you to meet your budget You live partly on your savings You live in the open thanks to one or more credits

47%

Can save money

45%

In 2016 and 2014

65-69 years old 75-79 years old 80+ years old 70-74 years old

47% 50% 45% 42%

They would rather stay in their current home than moving anywhere more suitable, but senior housing would be their second option

119 5% 19% 23% 53% Often Sometimes Rarely Never

How often do you think that you should move to a new home because your accommodation is no longer suitable for your current life?

69% 31% 9% 14% 14% 10% 21% 43% 54% 43% 37% 37% 10% 26% 37% 43% 49% 53% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Stay in your current home by adapting it Living in a new accommodation alone or with my partner in a more suitable residence offering different services Living in a retirement home Benefit from the help of a "companion" robot Living with a relative who would take care of you Living in an apartment that you would share with

• thers

It would be desirable and realistic It would not be desirable although realistic It would be unthinkable

If you were to become dependent and in need for a medical follow-up to live, how would you think of the following solutions?

Ipsos surveys 2016 and 2018

1 in 4 seniors, feel they should move because their current accommodation is no longer suitable for them

Have you already begun to anticipate the adjustments you would need to make in your home if you were to experience a situation of dependency?

37%

YES

63%

NO

Conclusions

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Strong potential to grow further in Europe

 European countries are inevitably ageing but at different pace and to a different degree  Senior housing is an increasingly strategic investment opportunity  Germany, France, the UK, offer the best potential  Other countries should be considered depending on strategies  Elderly living habits are slowly changing  Operators have an important role to play  In the future, affordability will be a major challenge

Thank you

Eri Mitsostergiou - European Research Director

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