Investment in Retirement Housing in Germany -- A Prosperous Market
by Uwe Falkenberg
What is the difference between sheltered
housing, warden assisted housing, retirement housing, extra care, close
care, assisted living, retirement villages and retirement communities?
Retirement housing is often called sheltered housing or warden assisted
housing. Extra care housing, very sheltered housing, assisted living are
terms used to describe a variety of housing designed with the needs of
frailer older people in mind. These schemes have varying levels of
care/support on site including a dining room, personal and domestic services
and 24 hour support.
Due to the population development in Germany the proportion of retired
people is constantly growing. It is a market segment of growing importance
in all business sectors from medicine and consumer goods and housing of
cause. There are government financed subsidies for the client based on the
level of care needed which allow a secure calculation of revenues.
Best positioned are properties with a flexible offer where the service
expands along the growing support needs with increasing age.
According to the latest IKB Property Barometer
(IKB Deutsche Industriebank AG)
the 2007 - 2008 view on this property type is still positive amongst
property developers. The rent/price factor was around 15 fold, the traded
volume in 2007 was about € 1 billion.
Opportunities:
- Growing demand due
to demographic and medical development
- Shortage in suitable
housing (door width, special bathroom design etc.)
- Change in social
structure through smaller households with fewer options for home care
- Pressure on hospitals to dismiss patients earlier
- Many service
providers to choose from in a growing market
- Low vacancy rates
due to waiting lists
- Standardised service
benchmarking and pricing according to target markets
Risks:
- Changes in state
financed care subsidy payments
- Specific needs of
the location and existing or expected competition
- Technical status of
the building and care specific installations
The risks either
concern the entire market like possible changes in subsidy payments and thus
will not disturb the competitive position or are manageable through a due
diligence before the purchase.
An example for such a
property is
Max Steenbeck Str. in Jena (Thuringia) which has serviced apartments
with individual contracts. The service provider is one of the commercial
tenants with 24 hr. availability on site. Also services like physiotherapy
are tenants in the property.
The author
is a Berliner and active in the German property market for more than 25
years. Experienced as project manager, developer and head of the German
Business for a UK based property consultancy he now owns and operates
Berlin Portfolio Ltd
His international background and local expertise is an ideal combination for
an international investor. For Property Search we recommend
Properties in Germany
This work is licenced under a
Creative Commons Licence.
