Care homes needed in Germany, according to ZIA

In its annual Spring Report, the ZIA (Central Real Estate Committee) analyses the German real estate market. For 2020, ZIA found that the number for senior housing offers are not sufficient. Due to the demographic development, nursing homes are necessary like never before.

The number of older people is growing steadily in Germany. Very few live in an apartment that is tailored to the needs of seniors. To meet future demands, project developers must take action now. Source: pexels.com

Successful real estate investments are undoubtedly dependent on long-term demand and ongoing trends. Thus, nursing homes and senior housing offer enormous potential right now. Due to demographic developments in Germany, the need for care homes is growing exponentially. From 2025, the Federal Republic expects a considerable surge in demand as the people of the so-called baby-boomer generation, are entering retirement age. Consequently, until 2060 at least, there will be an increased need for senior housing. The market share for assisted living offers for people older than 65 is currently at only two percent, according to the evaluation of ZIA. The housing market is not yet able to retrofit in compliance with the demands. As early as 2018, the Federal Statistical Office found that 85 percent of senior citizens do not have barrier-free access to their housing unit. According to the statistics, only two percent of all apartments in Germany are considered to be barrier-free.

Offers for senior homes are below demand

According to the current evaluation of ZIA, around 7,000 residential complexes in Germany offer residential units for older people. By this, a total of 300,000 apartments are available for seniors. Around 600 care home facilities are currently under construction and will be completed in the next few years. Despite the efforts, the level of coverage is low. Only 1.8 percent of people in Germany over the age of 65 are living in a senior home currently. The offers vary from autonomous living concepts for older people to fully inpatient stays in care facilities. According to ZIA, 85 percent of the existing facilities for senior living are rather small and have an average of 44 and a maximum of 80 smaller residential units. The basic rent excluding service fees is usually at around 9.00 euros per square meter, which is higher than the average rent in Germany.

Experts see high potential in care home investments

Therefore an investment in care homes offers numerous opportunities for private and institutional investors. From the purchase of a single residential unit to the participation in large construction projects, due to the high demand, attractive returns can be achieved. “In 2060, one in three Germans will be over the age of 65, and one in seven will even be beyond the age of 80. With a rapid increase of 33 percent, the industry is already facing the challenge of 3.5 million people in need of care by 2030, which corresponds to a necessity of roughly 371,000 additional care units. With such growth, demand is considered to be secured and concerns about the profitability of particular locations are negligible – a nursing home is therefore a low-risk investment”, Sebastian Reccius of DI Deutschland.Immobilien AG assesses on the current situation.

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