The Residences Services Seniors,
an attractive real estate asset?
an attractive real estate asset?
Today, Parella Valuation is looking at the case of the Résidences Services Seniors (RSS), managed halfway between classic residential and coliving for seniors.
In view of the aging population, can we expect a generalized development of this model throughout the country?
A singular and relatively contemporary asset typology
The emergence of Senior Citizen Residences in France
Appeared in 1973 in Biarritz, this real estate product has developed over time. Towards the end of the 70's it experienced a real boom, with the arrival of developers on the market.
The legal framework of the Résidences Services Séniors
The law of July 13, 2006 marks a turning point for this segment of the real estate market. Indeed, it inscribes the specificities of the regime of this type of assets in the field of co-ownership.
Legally defined by article 15 of the law of December 28, 2015 on the Adaptation of Society to Ageing ("ASV" law), the Résidences Services Séniors are characterized by "a group of dwellings made up of autonomous housing units allowing the occupants to benefit from specific non-individualizable services. The specific non-individualizable services are those that benefit all the occupants by nature".
A real estate product that differs from healthcare assets
While the EHPAD and the autonomous residences are medicalized structures welcoming dependent elderly people, the Senior Services Residences are defined as accommodations for autonomous people (able-bodied or semi-able-bodied) aged 60 or more, and are therefore outside the medical-social sector.
As they are not subject to the Code de l'Action Sociale et des Familles (CASF), they do not require prior authorization from the Conseil Départemental or the Agence Régionale de Santé. Thus, this type of asset benefits from a certain flexibility as to its establishment and operation.
A resilient market for investments in Seniors' Residences
resilient in the face of the crisis?
resilient in the face of the crisis?
2019 and 2020, the "Two Glorious Years
After a good year in 2019 (€523 million), the Retirement Home market continued to grow in 2020, with investment volume increasing by 4.6% to €547 million. 547 million. This performance is illustrated by the predominance of VEFAs (Sales in Future State of Completion) in this real estate segment (77% of the market share), underscoring investors' interest in this type of asset.
Post-crisis investment volumes are mixed
In 2021, the Retirement Home market is slowing down, with only 484 million euros invested. This compares to an average of €514 million over the past five years. This decrease is mainly due to an under-supplied market, with only 18 transactions completed, mainly in the regions.
An encouraging start to 2022
With a prime rate of return of 3.50%, the amounts invested in Seniors' residences in the first half of 2022 amounted to 330 million euros. This 159% increase in one year reflects the resilience of this real estate product. This represents 9% of the total investment volume in residential real estate.
Like Coliving and Student Residences, RSS are positioned in the managed residential real estate segment, i.e. serviced residences. In fact, they are theleading investment in managed real estate, accounting for 52% of volumes in thefirst half of 2022.
HSS are relatively secure assets, displaying a certain stability even in times of crisis. In fact, based on financial and social-demographic criteria, the market for these residences should continue to develop throughout France in the years to come.
This asset requires the use of market analyses and databases to identify future developments.
The natural and necessary deployment
of Senior Services Residences
of Senior Services Residences
The increase in the ageing of the population
In 2021, there were 15 million people aged 60 and over in France. According to forecasts by the Ministry of Solidarity and Health, this number is expected to rise to 20 million by 2030, reaching 24 million in 2060.
The progressive implementation of HSS on the territory
In 2016, there were an estimated 540 Senior Services Residences in France. At the end of 2021, 972 were in operation throughout France, for approximately 75,675 homes, an increase of 80% in 6 years.
By the end of 2023, this number should have risen to 1,147 establishments (+18%) for 92,273 housing units (+22%).
In contrast to EHPADs and independent living residences, which have seen more limited development in recent years, the outlook for RSSs is exponential. Indeed, with an annual start-up of 80 to 90 residences, the real estate stock of recent years could evolve by + 330% to + 440% in 10 years, according to a report published in November 2018 by The High Council for Family, Children and Age.
To conclude
In fine, with a growing aging population and an increased sensitivity of the French regarding the well-being and living conditions of seniors, the Senior Services Residences should benefit from a continuous expansion during the decades to come. They therefore remain a promising real estate product for both investors and operators.
Nevertheless, identifying the asset that will best meet your expectations in terms of investment or operation requires a good vision of the market (financial, economic and geographic). This allows you to take into account all the important aspects for the development of your real estate strategy.
Thus, to be advised and accompanied by experts in real estate evaluation intervening on all types of assets, throughout France, will help you to determine the rental and market values of the Residences Services Seniors.
Our Parella Valuation team is at your disposal to independently analyze your situation, your specific needs and answer your questions, regardless of your region.
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Sources
Residential: 2021 Assessment. (2022). Cushman & Wakefield.
State of play and outlook for the senior living market in France | Logement-seniors.com. (2018, February 2).
Flash Residential Investment 2020. (2020). Cushman & Wakefield
Ikory Economic Outlook - Residential Real Estate - October 2022. (n.d.). Galivel & Associés.
A disappointing Q2 despite continued buyer interest (Figures I Residential France I Q2 2022) / cbre.fr (Q2 2022)
France Figures Residential Q4 2021. (n.d.). CBRE France.
