Why it is profitable to invest in real estate for elderly people
The real estate market has always been an excellent option for short-term and long-term profits. However, there are some sectors of the market that have recently become increasingly interesting for investors. These include investing in real estate intended for elderly people. Houses for the elderly are in demand in the European Union and the U.S., in Russia they are not so popular yet, but some companies are already developing similar projects here. The yield of this type of real estate is from 4% to 9%, and experts predict that over time the indicators will only grow.
Last year KR Properties, which is owned by Alexander Klyachin, built a house for elderly people in the elite district of Moscow. The luxury residence cost about 280 million rubles. Such an object became an exotic project for Russia rather than a commonplace one. However, everything is different abroad. In developed countries real estate for the elderly is popular and in demand, which affects its profitability – 4-9%.
According to data from the UN Department of Social Affairs, which deals with social issues, by 2050 the world’s population over 65 years of age will be about 16% of the total. At the moment, they are 9%. In Europe and the United States such people will be every fourth citizen. Now there are 143 million people living in the world, who are 80 years old, in 30 years this figure will increase by 3 times – to 426 million. The total population of the Earth will increase to 9.7 billion people, now it is 7.7 billion. The growth will be 26%.
Knight Frank Wealth Report analysts calculated that last year $9 billion was invested in nursing homes around the world. This is 3 times less than investments in hotel complexes and 4 times less in logistics real estate. That is why experts allocate facilities for the elderly to the fastest growing market in terms of income generation.
According to experts’ estimates, in 2040 the number of U.S. citizens over 75 will increase from 21.2 million to 42.5 million people. And here this type of real estate is rapidly developing. Investors are offered a variety of options for facilities with round-the-clock staff assistance or relatively independent housing with separate amenities and kitchen facilities.
In March last year, a new complex appeared in Chicago. The Public Library is located on the first floor, and the rest of the space is designed for comfortable accommodation for elderly people. There are 44 cozy apartments with panoramic windows. The real estate was financed by the municipality, which wants to make the library a place for meetings and communication of people, which is often lacking for elderly people.