Bouwinvest: Senior housing, impact investing with double benefits
This article was originally in Dutch. This is an English translation.
The Netherlands is facing a demographic shift: the number of people aged 85 and over will double in the next fifteen years. This is not only a social challenge, but also an opportunity for institutional investors to make a difference and at the same time position their portfolios for the future. Impact investing in senior housing is an investment that combines social value, controlled risk and financial returns.
By Maya Savelkoul, Fund Manager Impact Investments, Bouwinvest
The structural demand for suitable housing for senior citizens is putting pressure on the housing market. The shortage of accessible and affordable housing is hindering mobility. First-time buyers, families and students are finding it difficult to find housing, partly because older people have no options to move on. This leads to social pressure, but at the same time offers investors the opportunity to invest in a segment with robust underlying demand and broad support.
Impact investing is more than just a label
Impact investing in senior housing is about more than just fulfilling a social responsibility. It means investing in real estate where the need is greatest, with direct benefits for both society and the supporters of investors such as pension funds and insurers. After all, the supporters of these investors benefit twice: from risk-adjusted financial returns and from better, future-proof housing for themselves and their communities.
Senior housing is less sensitive to economic cycles, as demand is driven by demographics and social trends.
Market trends: structural demand and solid fundamentals
The need for future-proof senior housing is growing faster than supply. New construction is hampered by policy, construction costs and regulations, while underlying demand remains structurally high. This segment is also less sensitive to economic cycles, as demand is driven by demographics and social trends. This creates an opportunity for institutional investors to invest in a market with stable demand and limited vacancy risk, especially with a good choice of location and focus on relevant target groups.
The coming years will be decisive for those who want to respond to demographic trends and social needs.
Risk and return
Senior housing stands out within real estate as an investment with stable, predictable cash flows. Income consists of direct returns through long-term leases, for example with care organisations or through master lease constructions, and indirect returns through potential increases in the value of the property. In addition, the risk is spread across different tenants and properties, which contributes to the quality of the portfolio. There is broad public support for this type of housing, which means that the segment also enjoys political and social support, reducing the likelihood of significant policy risks. Moreover, lifetime-proof property remains attractive even if market demand shifts, as these homes are relatively easy to adapt for other purposes. Thus, senior housing within a diversified portfolio not only offers stable returns, but also manageable risks and long-term flexibility.
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Impact in practice For institutional investors, the De Grote Lijster project in Uithoorn is a good example of how a clear investment strategy in senior housing can result in stable income and demonstrable social added value. De Grote Lijster is a private residential care complex that focuses on elderly people with more intensive care needs, including people with dementia. The project fits within a broader strategy that focuses on high-quality, future-proof care homes with long-term rental security and low vacancy risks. What sets this development apart is its focus on sustainability and flexibility. The building will be constructed with an above-average score on sustainability certifications such as GPR, BREEAM, CRREM and BENG. As a result, it not only meets current standards, but is also prepared for future legislation and regulations. The homes can also be adapted for other target groups, which increases the long-term usability of the property. De Grote Lijster thus underlines how impact investing in senior housing contributes to a robust portfolio with sustainable returns and social relevance. |
Measurable impact and reputational value
Investing in senior housing means measurable social impact. Think of the number of additional homes, the extent to which older people can live independently for longer, and improvements in health and well-being. These results are increasingly being made transparent through ESG frameworks and transparent reporting, which is in line with the requirements and wishes of regulators and investors.
In addition, there is a solid financial return, generally in line with regular residential investments. This combination of social impact and solid returns makes senior housing an interesting investment category for the coming years.
Looking to the future
The coming years will be decisive for those who want to respond to demographic trends and social needs. Senior housing offers institutional investors the opportunity to benefit from a structurally growing market, with stable income and demonstrable social value. This creates a solid position within a portfolio that is ready for the future.
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SUMMARY Due to ageing, the number of people over 85 will double in 15 years, creating structural demand for senior housing. Institutional investors can not only create social value and build reputation in this segment, but also achieve financial returns. Senior housing offers stable, predictable cash flows thanks to long-term leases and robust demand. Measurable impact is possible through clear ESG KPIs. |