Developers still doing well
25 April 2019
Kazimierz Kirejczyk, FRICS
Łódź: the shining star of the development market in 2018
6 February 2019
The housing market in 2018: a thriller with a happy ending
22 January 2019
Summary of 2018 on the primary residential market
31 December 2018
Kazimierz Kirejczyk, FRICS
Long-term rental only for a year?
21 November 2018
Maximilian Mendel, Ph.D., MRICS
Ageing of the population of Poland makes seniors a promising and still unsatisfied target group of customers for developers and investment funds from the real estate market. Depending on the age and individual situation, seniors require solutions from a broad spectrum of housing products – ranging from flats adapted to their specific needs to institutional facilities for those requiring constant care.
Poles live longer and members of the generation of post-war “boomers” are currently turning 60. As a result, in 2030 seniors will represent 30% of the Polish society. Meanwhile, unlike the previous generations, over the next two decades people in working age, usually both working and raising children, will have limited possibilities and be less willing to take care of their parents and grandparents personally. The need for living independently for as long as possible becomes of key significance for both seniors as well as social policymakers.
Although the majority of seniors would prefer to spend their retirement in their current flats, contemporary “younger seniors” (before the age of 70) are becoming increasingly more aware of the potential obstacles which may make that impossible. These factors include:
People becoming seniors nowadays are more ready to change home to prolong their self-reliance than their parent’s generation. We estimate that by the end of the decade (2020) decisions about their future homes will be made by around 400,000 households from the generation of younger seniors. It is a good idea to offer these seniors flats with additional amenities for the initial period of greater activity. The flats should be relatively easy to adapt to meet the growing needs of seniors – from mature to old age. This solution meets best the needs and preferences of the eldest and their families and is cheaper than the assisted living facilities for seniors, which senior housing is traditionally associated with. One should assume that the collective living facilities will be a solution for the limited group of the most vulnerable seniors, both in view of low social acceptance as well as the highest costs. Around 1% of seniors live in assisted living facilities in Poland and 4–10% in Western Europe.
The priority in senior housing initiatives is to satisfy the universal needs of the seniors, which comprise accessibility, inexpensiveness, social integration, intergenerational solidarity, assistance and care. Convenient location is of key significance. Seniors prefer to live near a park, forest or a body of water (river, lake, sea) but at the same time sufficiently close to the transport network, pedestrian routes, facilities (recreation grounds, library, clinic, store) to feel self-reliant and integrated. Therefore it is important to stay close to family and friends.
The offered flats should be freely adaptable to the changing needs of their ageing owners:
For example, a flat occupied by an early senior should be adaptable to the lower mobility of a more mature senior through installation of additional amenities (such as railings or bathroom grab bars). It should ensure access to infrastructure (shopping, laundry, cooking, transport, healthcare) and, if necessary, the senior should be able to move to a specialist facility located in the same housing estate or nearby.
Similarly to the housing market in general, only some of the seniors are able to satisfy their housing needs on market terms entirely self-reliantly. Polish seniors usually receive modest pensions and their savings are probably low. However, most of them have a relatively valuable asset in the form of an owned flat, which can be “monetised” for relocation purposes. The available solutions include: selling the flat/house, using reverse mortgage, buying an annuity or keeping the flat/house for rental. It is fairly common for children to support their parents financially and the flat to remain in the family.
Solving the housing problems faced by seniors requires the involvement of local authorities, social organisations and a number of private businesses as well as support through central government programmes. Local government authorities need to identify senior housing needs, taking into account demographic forecasts and housing resources. They should also initiate, coordinate or at least become actively involved in the cooperation with the private sector and non-profit organisations (NGOs) to ensure appropriate standard of living for the local population. The absence of appropriate solutions for seniors is likely to become a major burden for local governments in the near future.
The scale of needs varies and depends on the size of the city as well as the demographic structure of the population of the entire city or its parts. The greatest attention of local governments is required in same-generation housing estates inhabited in the 1960s and the 1970s, consisting of four or five-storey buildings with staircases and no elevators. Ensuring self-reliance of the ageing residents of the upper storeys by adding elevators is uneconomical and difficult from the technical point of view.
Although senior housing needs on the country level cannot be satisfied without the involvement of the public and social sectors, they open up increasingly attractive business opportunities. The vast majority of senior housing projects can and should be pursued in cooperation between the public and private sectors, while some of them should be delivered by private businesses only.
The collective living segment requires specialised operators managing facilities which offer all nursing and medical services. In the West, the operators provide mobile care services provided “on-site” to the ageing seniors increasingly more often, reaching out earlier to the potential residents of their assisted living facilities. Some of the operators also own the facilities where they provide their services.
In the West, collective living facilities and senior housing offered for rent are sought after by investment funds investing in real estate generating income from rent. In the United States and certain European countries, many buildings are owned by specialised real estate investment trusts (REITs), which enable private investors to invest in real estate passively (indirectly). Investment funds can invest both in collective living facilities as well as flats offered for rent adapted to the needs of seniors.
Senior housing not intended for collective living is popular with developers, which construct individual buildings, building complexes or senior housing estates. Flats in the buildings are offered for purchase or rental. In the case of rental, developers prefer selling the building to an investment funds or an operator to “manage” the individual flats for seniors or to offer additional services, assistance, care and nursing to the elderly.
We encourage you to read the “Outlook for senior housing in Poland” report in which you will find information about: