The number of registrants for the latest online Roundtable Discussion on 21st April from REFIRE and Targa Communications – at over 400 – was testament to the level of interest in the asset class Healthcare and Senior Living. Moderated by Charles Kingston of REFIRE and Andrew Barber of Targa Communications, the discussion proved highly informative, and there were no shortage of questions and impulses from the very engaged audience. Still, a time limit had been set and was (more or less) adhered to.

While the overall investment category of Healthcare encompasses a wide range of subsectors, from doctors’ houses to medical centres to ambulant care homes to nursing homes, it is beyond the scope of a one-hour-plus discussion to do all the individual sub-sectors justice. Our panelists focused mainly on German healthcare and how investors can access the sector through funds, and the increasingly visible segment of Senior Living.

Julia Momotiuk of Bonard opened up the discussion with a presentation showing how in Germany the availability of cheaper land and unmet demand was leading to the development of senior residences outside the largest cities. The share of senior aged 60+ in Germany is set to increase from 28% in 2019 to 31% in 2025. Demand coverage is highest in Bonn at 7.7%, with Nürnberg at 6.9% and Stuttgart at 6.8%. The Bonard research identifies growing demand for privately-owned residences propelled by high levels of income among many seniors.

Samuel Vetrak, the CEO of research group Bonard, which has produced a major study on the Senior Living sector in Germany, highlighted how the provision rate of about 1% in the serviced living sector is extremely low, and agreed with Dr. Held about how much more potential there is in the German market. With more supply, yields should also rise. The real opportunity is in development, which is what Dr. Held’s Terragon does.

Vetrak underlined Muno’s point that the average size of an individual investment is usually too small for a pension fund. In contrast to the USA, for example, most Europeans are not retiring to sunshine regions, but rather prefer to stay close to family and relatives. Municipalities will have to provide land at affordable prices to encourage developers and ultimately, consumers, who will choose an affordable form of serviced age-appropriate living.

All in all, a very lively and stimulating discussion from a highly experienced panel, on a subject which is clearly of major interest to experienced, and – increasingly – new investors.

 

The full article was originally published on REFINE online (Jun 2021) at the following link.

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