Healthcare and senior living has become a mature asset class but it has challenges, in particular in the stock itself, Ron Van Bloois, partner in property consultant Hevo, said in a presentation to the REALX.Global session, Impact Investing, Senior Living and Healthcare.
The ascendancy of healthcare and senior living as an asset class is partly driven by investors’ search for alternatives to the beleaguered offices and retail investment asset classes.
However, more recently, the corona virus crisis has also demonstrated that the healthcare and senior living asset class is attractive because it is both resilient and not correlated to political tensions or economic cycles.
Van Bloois, who is also a lecturer at Amsterdam School of Real Estate and co-founder of the Senior Housing and Healthcare Association said that while demographics ensure that the sector is booming, it is one that contains different target groups with distinctly different needs. These range from the self-sufficent elderly who need community, to those with dementia and suffering physical impairment that need 24/7 care.
Perceptions of needs frequently mismatched
Alexander Watson, investment manager at Care Property Invest said there are different perceptions of need. Investors may specify that a home’s clients have separate bathrooms and separate kitchens. But Watson said that an actual visit to such homes reveals that the clients may be in their last years or even months of life and are unable to use these facilities and communal bathrooms would be more appropriate.
“So you get a mismatch in what we think is right in the market and what is actually needed in the market,” Watson said.
Martin Zsarnoczky, project leader, Matra Resort Senior Living added that it is basic services that are very important. Research he has undertaken in the US and Canada found that, even in that market, the key factor missing is “the human touch”. People will pay more for better care. Their happiness is not just about having an extra bathroom, he added.
We are moving towards becoming a “caring community”, according to Geert van der Heijden, healthcare sector specialist, Rabobank. He said this means that senior people can live longer in their own homes. However, there are real estate implications and, as well as nursing homes, neighbourhoods need to be developed in the centres of towns and villages that encourage interaction. Real estate has to be applicable and local stakeholders need to start a dialogue.
Anja van Balen, sector banker healthcare, ABN AMRO emphasised that in senior living and healthcare investments, the operator is crucial and it is not just a question of getting the right real estate. She said that when a proposal reaches her desk, after the type and size of property, she asks who can afford it, what the energy rating of the asset is and lastly, who is healthcare provider and what does the local GP think about it. “There has to be a match because ‘stones only’ is not sufficient.”