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Service-oriented living: an asset class, that profits from demographic change.

INVESTMENTS IN SERVICED LIVING

Most institutional investors automatically think of nursing care facilities when they think of real estate for seniors. TERRAGON has a different perspective and views SERVICED LIVING as an asset class in its own right, with a range of individual characteristics as an investment category. SERVICED LIVING refers to residential complexes for senior citizens, and makes it possible to combine the comforts of modern, high-quality, barrier-free housing with a range of supplementary services.

THE EVOLVING AGE PYRAMID CREATES POTENTIAL

There is massive demand, as people want to remain in their own homes for as long as possible as they grow older. For this reason, TERRAGON developments are designed to be barrier-free throughout, and to offer residents access to all of the services they may need to make their lives easier as they age. Thus, investments in SERVICED LIVING actually have more in common with regular housing than they do with investments in the nursing care sector. This is an important distinction to bear mind when evaluating an investment in real estate for senior citizens. 

OUR EXTRA: WIN-WIN SITUATION WITH THE LIFE TENANCY MODEL

When it comes to risk assessment, SERVICED LIVING is distinct from the rest of the housing market. With an intelligent and well-implemented concept, vacancy risks become a non-issue. Rising life-expectancies and the demographic changes to Germany’s age pyramid are equally positive factors. Age-appropriate housing is rightly viewed as one of the biggest winners of demographic change, and SERVICED LIVING is clearly an asset class with significant potential. Applicants currently face a 2-to-3-year wait for an apartment in a facility such as the Agaplesion Residenz Sophiengarten, and waiting lists are common in the sector, reflecting the high level of demand from potential residents.

SERVICED LIVING offers institutional investors a further significant advantage: the life tenancy model as an additional marketing line. Instead of letting apartments or selling individual condominium units as is traditionally the case, units can be marketed in the form of life-long tenancies. For investors, this means that they retain ownership of the real estate at all times and have the chance to increase their equity yields. Life-tenants benefit from security against rising rental prices. The model creates a win-win situation, serving the best interests of both parties. 

WHY INVESTMENTS IN SERVICED LIVING ARE SO LUCRATIVE:

  • Highly-promising market: Investors can expect constant increases in demand as a result of demographic trends.
  • Life-tenancy option: SERVICED LIVING is perfectly suited for marketing of both traditional tenancies and life-tenancies, which promises higher equity yields.  

 

 

WHAT INVESTORS NEED TO KNOW ABOUT SERVICED LIVING:

  • SERVICED LIVING is not a pure real estate concept. The quality of any offer depends largely on the range of supplementary services provided to residents. It is therefore crucial that an experienced project developer is involved as a project partner, overseeing every stage of the development, and that the eventual operator is able to provide an appealing package of extra services designed specifically for the project’s target residents. 
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  • There are currently wide regional variations in the provision of SERVICED LIVING across Germany. Whereas Frankfurt am Main boasts a large supply of SERVICED LIVING facilities, the model is quite rare in other towns and cities, such as Mönchengladbach. Investors should bear this in mind when making their investment decisions. 
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  • As with regular housing, secondary utilization is not an issue. In most cases, such barrier-free developments are situated within fair to superior residential neighborhoods and can easily be rented out, even without supplementary services or a specialized operator.

As an ever-increasing number of people hope to spend their twilight years living independently within their own homes, SERVICED LIVING is an investment with a great deal of value-add potential.