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New study reveals potential of German senior housing

Growing demand and lack of supply make the German senior housing market attractive to investors, delegates heard at Real Asset Media’s German Senior Living briefing, which was held online recently.

“There are very good opportunities in Germany if you choose the right location and the right operator,” said Frédéric Dib, president, Mozaic Asset Management.

The sector’s potential is confirmed by the findings of the very first in-depth report on the German market, which was commissioned by Mozaic and researched by Bonard in order to have comprehensive, standardised and transparent data which can give investors information and confidence.

“The senior living market in Germany has experienced considerable growth over the last few years, due to a rapidly and continuously ageing population and a significant shortage of assisted living establishments across the country,” said Julia Momotiuk, senior research manager, Bonard. “The provision rate does not exceed 3.9% now and will decline to 3.4% by 2025.”

The report focuses on the top 20 cities in Germany, where current supply is 65,000 assisted living-type apartments, while there are more than 1.66 millionpotential tenants aged 75 or above.

Germany’s population third oldest in Europe

Germany has the third-oldest population in Europe after Italy and Greece and it is projected to grow significantly. The number of people above 75, currently 9.5 million, will rise to 9.8 million by 2025, while people aged 60 to 74 will grow from the current 14 million to 16.2 million in five years’ time. 

Berlin will see the biggest jump, with the current 359,000 inhabitants over 75 projected to increase to 485,000 by 2025. In all 20 cities surveyed, with the exception of Duisburg, the provision rate will decline in the next five years as the elderly population grows.

The average age of entry in a senior residence in Germany is 80. The pipeline is considerable, but still not enough. In Berlin, for example, there are 700 assisted living apartments being built, but 5,000 are needed.

“German developers and investors are building or planning to initiate more than 370 projects, with a total capacity of 16,300 apartments,” said Dib. “There’s a building boom across Germany but what’s coming to the market will not satisfy current demand, let alone cater for the expected growth in demand.”