Silver Economy – What Opportunities Aging Society Creates
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Silver Economy – What Opportunities Aging Society Creates

Aging will be a powerful societal and economic driver that will transform property markets.

Thanks to advancement in medicine and better living conditions we live longer and longer. On the other hand, in many countries fertility rates have been plummeting. As a result in 2050 the median age worldwide will be 36.1 years in compared to 29.6 today. Six of 10 women and slightly over 5 of 10 men born between 2000 and 2005 can be expected to live until 80. This causes shift in the structure of society and will definitely have a big impact on consumer markets resulting in transformation of property markets.

Senior housing: Impressive Growth Prospects

Trends showing growth of aging population and demand for appropriate housing for this cohort remain ambiguous. Although the elderly remain independent and healthier for longer, demand for customized senior housing is likely to increase significantly.

There Is No Such Thing as Seniors' Home

During the active adult life, housing preferences are defined by choice and usually by a low level of care. Thus, households stay within their housing situation often for many years. With age, the needs and level of care can change rapidly along with demand for housing. Senior housing typically starts with barrier-free apartments that are easily accessible by public transport and are close to medical care, dining, shopping and recreation facilities. The support of social contacts within the community is important as well.

Structure of senior living and care facilities

Structure of senior living and care facilities

Source: Credit Suisse

Supply of assisted living services (e.g. ambulatory care, household assistance, emergency service) supports a household's independence and delays relocation to care or nursing homes. Senior housing which is close to care homes, hospitals or medical centers can also generate considerable synergies. Furthermore, senior living operators increasingly run facilities that consist of multiple units and allow residents to "age in place."

Growth Potential for Investments in Senior Homes and Allied Infrastructure

While governments will find it challenging to design innovative policies that guarantee housing for the elderly, it might present an attractive opportunity for investors. The private sector will play a vital role as rapid growth is likely to overstrain public sector finances in many countries. Economies of scale and optimization of processes in care, nursing and dementia homes are likely to open up promising investment opportunities.

Another area with momentous growth potential covers service providers for assisted living. Such companies benefit from the desire of an increasing number of households to stay independent as long as possible as well as fast increasing care costs that demand more efficient care systems. Services such as ambulatory care, physiotherapy, household assistance and entertainment, as well as provision of automated safety equipment are likely to face high demand in future.

Given the acceleration in the aging trajectory it is certain we need to address the needs and wants of seniors. Proper senior housing is one of the basic ones to be fulfilled. In our view, investing according to those demands is likely to bring attractive returns.