‘Short-term problems, long-term opportunities’

Covid-19 has hit the sector hard but it has also shone a light on its importance, experts agreed at Real Asset Media’s Senior Housing & Healthcare Briefing, which took place online recently alongside the launch of the Senior Housing and Healthcare Association.

‘The health crisis has had an adverse impact, with declining occupancy and increasing costs, but the fundamentals remain strong and the momentum remains in force,’ said Keith Harris, Executive Director Operational Real Estate, CBRE. ‘Tens of thousands of quality beds will be needed every year in Europe at least until 2035’.

It has been a difficult time in nursing homes, where the epidemic has had a disproportionate impact. In the short term, morale is low and the increased scrutiny and focus on safety will lead to higher costs, but longer term the fundamentals of supply and demand will re-assert themselves. 

‘It has been a dramatic time, but the reality is that the human cost has been far greater than the financial cost,’ said Frédéric Dib, President, Mozaic Asset Management. 

Despite the high number of coronavirus-related deaths in nursing homes and the stop to recruiting new residents during the crisis, the drop in occupancy rates has been 10% at most, he said: ‘This means a drop from 99% to 89% occupancy rates, which is above break-even. It just shows how resilient the sector is’.

It is a belief shared by market experts. According to a snap poll conducted by Real Asset Media, 62% of respondents think that Senior Housing and Healthcare will grow significantly as a sector post-crisis and 38% believe it will continue growing at the same levels as in the recent past. 

‘Covid-19 has shown that healthcare is more important than ever for society,’ said Ron van Bloois, Partner, HEVO. ‘Looking at demographics and fundamentals, it is a real safe haven for investors’. 

In future there will be an increased focus on safety as well as quality. 

‘The next generation coming to healthcare facilities will be the baby boom generation, which has higher expectations in terms of facilities and technology,’ said Geert Wellens, Partner, Triginta Real Estate Fund. ‘Investors will put pressure on providers to increase the quality of space as well as care’.

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