Senior Living – our view on a fragmented market

Demographic change is leading to a rapid increase in the number of people in Germany aged 60 and over. As early as 2040, one third of all older people in Germany will be over the age of 80. Even today, there are already twelve million senior citizen households in Germany – of which, in turn, only 8.3 per cent live in barrier-free accommodations. 

These developments are having a major impact on the demand for senior citizen-friendly housing – or rather all-age-friendly or ageless living space. After all, increasing age is often associated with limitations and constraints that have a negative impact on everyday life and make it more difficult to live life to the fullest in one’s own residence.  

All of this together created the growing demand for suitable housing options for life in old age and has helped to promote “senior living” as a real estate and investment asset class in its own.  

But what exactly is senior living? The market is highly fragmented and there is no clear definition of the individual product and service categories. At the same time, the market has not yet settled on a consistent terminology, which means it is not exactly easy to classify what each product or service encompasses. Retirement home, nursing home, assisted living facility, senior residence, healthcare real estate, senior living, serviced living … These are all common terms, and they are all regularly used with completely different definitions, making it nearly impossible for stakeholders to develop a coherent understanding of the products and services on offer.  

In order to make sure we are all on the same page, we would like to provide an overview of how we at Sector7 have come to understand and define this asset class. 

First of all, we distinguish between two categories: senior healthcare and senior residential  

Senior healthcare (or nursing) real estate, for example, includes the following 

• Inpatient care homes (Stationäre Pflege) 
• Nursing homes (Pflegeheim) 
• Retirement homes (Altersheim) 

These are facilities that are exclusively aimed at seniors who need skilled care and who can no longer be adequately looked after in their own homes.  

Sector7 focuses primarily on senior residential, which we sub-categorise as follows:  

• Barrier-Free / Low-Barrier Housing: private “all-age-friendly” housing 
• Senior-Friendly Housing: homes with age-friendly features that are specifically designed to meet the needs of older residents (e.g. no thresholds, age-appropriate bathrooms, sensor-integrated personal assistance systems, etc.)  
• Serviced Senior Living: housing with structural specifications geared to older residents, with communal areas & concierge services, plus a range of flexible and optional care and supplementary services (provided by a single operator or partners) 
• Assisted Living / Senior Residence: residential complexes with a comprehensive range of both care and nursing services (outpatient and sometimes also inpatient) and extensive communal amenities (typically a restaurant, library, swimming pool, etc.)  

As detailed above, there is a wide range of housing categories in the senior living sector, each tailored in their own way to the needs of older residents. At the same time, however, the needs of senior citizens continues to evolve with each new generation. In anticipation of future market demands, it is imperative that the asset class also continues to adapt as we create new and different concepts in order to accommodate the evolving demographics.  

These should be geared to the specific wants and needs of senior citizens and reflect a range of location criteria, lifestyles and affordability, ranging from budget to premium concepts. 

With the Sector7 “Silver Living” Business Unit we already have an active role in shaping this development and are thus committed to creating new forms and environments for senior and assisted living, from which the society as a whole of will benefit sustainably and across generations.