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The investment funds we throw the eye to the residences of elderly

Increased life expectancy. Low birth rate. Societies ageing and family structures change. The future of Europe is not presented very jaranero from the demograph

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The investment funds we throw the eye to the residences of elderly

Increased life expectancy. Low birth rate. Societies ageing and family structures change. The future of Europe is not presented very jaranero from the demographic point of view, but for some investors, willing to make a virtue of necessity, he does expect a real feast of real estate. In fact you could say that the feast has already begun: between 2015 and 2017, the sector of residences of the third age was over 2,000 million euros in volume of investments, according to a market survey last property consultancy CBRE. And what comes, believe the experts, is even greater.

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The residences of students seeking to modernize and expand, in spite of the obstacles Nearly 4,000 elderly people in Barcelona expect square to enter a residence

Spain has about 376,000 worth of beds in nursing homes. On the total number of people over 65 years of age, assumed a coverage rate of less than 5%, recommended by the World Health Organization. To get to that percentage, and taking into account that the population of seniors will increase, they will need up to 200,000 additional beds in 2030 and 400,000 in 2050, according to estimates from CBRE. “It is a sector that is becoming increasingly stable and is going to stay in the time,” says José Alberto Echavarría, president of the Business Federation of the Dependence (FED). This employer's groups especially to small and medium-sized businesses, mostly in a market where the seven main operators control less than one-fifth of the beds.

The sector has been rewritten in less than five years. In 2014, the sum of the seven leading companies did not reach even 10% of the beds. But in recent years there have been acquisitions, mergers and expansions. The majority of the operations have been numbered with the momentum of investment funds. “There is a trend towards a greater professionalization of this service with larger companies and more been in procedure to enter into business traditionally family businesses,” says Pablo Callejo, director of Alternative Investments for CBRE Spain.

Domain of French capital

do Not need to look far to find an example. DomusVi, which is leading the bid with more than 22,000 beds in 119 residences, only exist as such in Spain since a year ago. It is about a group of French origin, whose control took in 2014 PAI Partners, a venture capital fund of the same nationality. The new owner opted for the internationalization and set his eyes on Spain. In three years he bought two of the largest national operators, Geriatros and SARquavitae, and merged. In 2017, PAI Partners, sold its entire participation to the fund british ICG, and to the Cepbahis SRS, the investment platform of the founder of DomusVi.

The presence of large investors among the main groups of nursing homes that operate in Spain is a constant. Orpea, the second in number of beds, and also of French origin, counts among its shareholders with CPPIB, the pension fund of Canada. And Vitalia, third on the podium, is involved in more than 80% of the venture capital firm Spanish Portobello Capital. The entry of these investors is due to the fact that “there is an interest by the two parties,” says Ivan Azinovic, a member of the department of Law real Estate practice of Ernst&Young. “This is a product that is more specialized than the residential housing or commercial,” continues the lawyer with more than 30 years of experience in the real estate sector, “the niches of typical have already been exploited and that's why there are socimis that are going to be market niches more specialized”.

students, another niche investment

The residences for students are another of the reefs that the funds have begun to operate in Spain. In 2017, attracted investments worth in excess of € 600 million, according to estimates published recently by CBRE. The property consultancy noted that the returns of investment for this type of assets in Spain are above those offered in Germany or the United Kingdom. In the best areas, can reach 5.5%.

how And where are these residencies? In addition to Madrid and Barcelona, the experts point to other cities, usually coastal, where the key is to keep the occupation in the summer months. Malaga, Valencia, Seville or Granada have new projects to expand its offer of accommodation to students. Because Spain, with six beds for every 100 students, behind the United Kingdom (24) France (15) Germany (10).

“The good thing is that they go hand in hand of operators who were already,” says Echevarría. The FED chairman described a very different situation when, during the housing bubble of the early twentieth century, landed builders in the business: “the crisis many halls closed down unviable, but because the managers were not professional”. That is why he is not worried about the forecasts of a greater concentration in the sector. “There is a 70% of small and medium-sized entrepreneurs that are going to follow because they know the sector and have the investment and the expenses are very depreciated,” he says.

what is this that comes? For Callejo, the expert from CBRE, there is no doubt that “there are new foreign operators that want to enter the market.” To achieve a prediction more concrete is difficult: the discretion is the rule required in this type of operations. But all experts consulted agree, broadly, with that statement, And also the reality of day-to-day. Javier Blasco is a businessman, to aragonese, which is offered in portals real estate to buy businesses, including nursing homes. I manage three in the past, but in the portfolio of your company there is now none. Has not managed to close any deal in a market that is considered "complicated". But his diagnosis is stark: "The residences small are disappearing".

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