Italy, with one of the world’s oldest populations, is at the center of an unprecedented demographic transformation. This demographic change highlights an urgent need: to develop adequate infrastructure and services for the elderly.
From Senior Living for the self-sufficient to assisted living residences (RSAs) for those who require ongoing medical care, to housing communities as an intermediate solution, the market offers many and varied investment opportunities.
Source: elaboration Itinerari Previdenziali Study and Research Center on Istat data
But how can investors navigate and strategically position themselves in this growing industry? And what are the main trends and dynamics that are shaping the future of senior living facilities?
“It is a sector somewhere between real estate and infrastructure, which is a great way to diversify and protect portfolios, especially in times of a weak economic cycle,” Giuseppe Oriani, ceo for Europe at Savills Investment Management, said at a conference. Source article Adriano Lovera in “The Sun 24 hours” published on 14/10/2019.
Demographics and the need for new solutions
Italy’s aging population is not just a statistic; it is a reality that requires concrete and immediate action. ISTAT forecasts that the elderly aged 65 years and older, who now make up 24 percent of the population, will be 34.9 percent in 2050. This increase is more than just a numerical change: it is a transformation that impacts every aspect of society, from social policy to the economy, from urban planning to health services.
The estimates are alarming: in 2030, just six years from now, there will be 4.4 million dependent elderly people in Italy, and this number is expected to grow to 5.4 million in 2050. Currently, non-self-sufficiency afflicts 28.4 percent of the elderly, which translates into a population of 3,935,982 individuals with severe functional limitations. These include cognitive, motor, and sensory limitations, as revealed by the latest European Health Interview Survey EHIS .
In Italy, the segment of over-80s is projected to nearly double from 7.6 percent to 14.1 percent by 2050, while the over-centenarians will grow from about 19,000 in 2022 to 77,900 in 2050, highlighting an urgent need to adapt facilities and services to the needs of this growing elderly population.
The data provided were taken from the document “Insight Notebook 2023: Silver Economy, the Great Economy of the Next Decade” provided by Confartigianato
Senior Living, RSA and Community Housing: A Spectrum of Opportunities
- Senior Living: these facilities are ideal for self-sufficient seniors who desire comfort, security and an active social life. But how are these environments adapting to the growing needs of a changing population?
- Nursing homes (R SAs): suitable for elderly people who require continuous health care and daily support, RSAs are becoming increasingly crucial. But what role can they play in mitigating pressures on public health systems?
- Housing Communities for the Elderly: providing an intermediate solution, these communities consisting of a maximum of 20 people offer a protected, familiar environment and personalized social welfare services. Will they be the market supply response?
Investments: returns and market dynamics
The senior living sector, RSAs and housing communities, not only offers a social response to a growing need but also represents an investment opportunity with attractive returns. With senior living providing yields around 5.5 percent and healthcare at 5.3 percent, these yields represent a significant premium over traditional government investments.
In an article by Luca Gavresti of “The Sun 24 hours” published on 04/17/2023 Antonio Fuoco, head of Living Capital Markets by Jll Italy, emphasizes a strategic perspective: to reach the ideal target coverage rate of 5 percent, about 600,000 beds need to be put on the market by 2035, doubling the current supply.
But this raises a crucial question: are investors ready to respond to this challenge? And how can strategies for aggregating operators into more structured groups influence the landscape?
Projections and Statistics: the urgency of investing
Although demographic catastrophism has been routinely debunked in the past the situation is pressing so is also addressed in the article by Massimo Rodà and Francesca G.M. Sica titled “The Third Age Economy: Consumption, Wealth and New Opportunities for Business.
With a 28.4 percent incidence of non-self-sufficiency among the elderly, nearly three out of ten will need intensive and personalized care in the coming decades.
This reality raises important questions: how can current structures expand and adapt to meet this demand? And what innovations are needed to improve the quality and effectiveness of care?
Families often find themselves alone in managing caregiving, with only 6.3 percent of the dependent elderly answered in a residential facility and only 0.6 percent in semi-residential centers. Integrated home care reaches only 21.5 percent of these individuals, with an average intensity of 15 hours per year per caregiver.
This leaves ample room for improvement, so how can we fill these gaps in support and assistance?
Strategies for investing in the senior living facility sector
- Regulations and Permits: Ensuring compliance with all regulations is essential for any type of facility.
- Location and Design: The choice of location and design of facilities is critical to best meet the needs of the elderly.
- Differentiated Services: Offering a diverse range of services is crucial to cover the full spectrum of needs of the elderly.
- Staff Training: Investing in staff training is a direct guarantee of the quality of services provided.
- Digital and Relationship Marketing: Effective digital marketing and a robust network of relationships are essential for business expansion.
- Financial Management: Prudent financial management is vital to ensure long-term stability and growth.
- Innovation and Continuous Improvement: Maintaining a constant focus on innovation and improvement is key to preserving competitiveness in the market.
Data and Perspectives: The Silver Economy and Housing Communities
The Silver Economy, which represents all economic activities focused on the over-50s, is growing rapidly in Italy, a country facing a significant aging demographic. Projections indicate that the percentage of those over 80 will nearly double from 7.6 percent to 14.1 percent by 2050, while the segment of those over 100 will grow from about 19,000 in 2022 to 77,900 in 2050.
These data, provided by ISTAT, underscore the urgent need for senior housing communities and care services adapted to this growing population.
This expanding elderly population needs strategic and proactive responses. Current facilities must prepare to handle this wave of super elderly by adapting services and improving the quality and variety of offerings to meet increasingly complex and diverse needs. Entrepreneurs who anticipate and adapt to these trends will be in a better position to thrive in the emerging Silver Economy market.
Life Expectancy and Health
Italy exceeds the European average for life expectancy at age 65. However, this increased longevity profoundly changes the care and support needs for the elderly. Facilities such as housing communities for the elderly must evolve to offer solutions that ensure not only long life but also quality life. This includes services ranging from rehabilitation to daily care, from socialization to psychological care, ensuring that the elderly live out their additional years in a healthy and fulfilling way.
Health and Self-Sufficiency: An increasing number of older people are living with functional limitations, which amplifies the need for facilities that promote autonomy and quality of life. Overcoming barriers to accessing appropriate services means investing in professional training, assistive technologies, and a holistic approach to caring for people. In addition, an inclusive strategy that considers the whole individual is essential to improving the experience and quality of life of older people.
Economic and Social Implications
Investment and Innovations: growing demand for housing communities stimulates innovation in services and infrastructure. The main obstacles to innovation include regulatory rigidity and difficulty in attracting investment. A multi-pronged approach is therefore necessary: promoting research and development, encouraging investment in the Silver Economy, and adopting policies that encourage the implementation of effective innovations are crucial steps toward improvement.
Support for the elderly: developing support networks and individualized services for the elderly living alone is essential, especially since only 6.3 percent of the dependent elderly were answered in a residential facility. Improving this rate means increasing the capacity of existing facilities and diversifying them to meet a wider range of needs, including assisted living, integrated home care and creating environments that encourage socialization and maintaining independence.
Perspective for Entrepreneurs in the Sector
For entrepreneurs in the Silver Economy sector, the landscape of the next 30 years offers significant opportunities. Expanding demographics and increasing life expectancy create a growing market for senior housing communities and a wide range of related products and services, from assistive technology to specialized furniture, from personalized nutrition to recreational and therapeutic activity programs.
Investing in this sector means responding to a social need and strategically positioning oneself in an expanding market. Entrepreneurs who recognize the value of an individual-centered approach and innovation, and who invest in quality solutions, will be the ones who stand out and thrive in this dynamic and rapidly changing environment.
In conclusion, the Silver Economy is not only a growing economic sector, but also represents a crucial response to the demographic challenges of our time. Entrepreneurs who successfully navigate this field will help define the future of well-being and quality of life for the elderly in Italy and beyond.
The importance of an experienced consultant in the field
Navigating the complexities of the senior living facilities market and offering top-notch solutions that meet the needs of a growing senior population is more than a challenge; it is a crucial necessity for every entrepreneur in the industry.
Coping with a rapidly changing landscape requires not only expertise but also a proactive vision to anticipate and respond effectively to emerging trends.
Have you ever wondered if your current strategy is robust enough to meet future challenges? And are you prepared to implement innovative solutions that not only meet but exceed industry standards, creating truly stimulating and supportive environments for older adults?
Conclusion
The need to work with an experienced consultant in the field is obvious. A consultant can provide the guidance needed to explore these issues and develop strategies that effectively address current and future needs. Together with a consultant, you can turn challenges into opportunities, guiding your business toward a future of success and innovation in the senior living facility industry.
Are you ready to take the next step?
Essential insights for every entrepreneur
- Understanding the Regulatory Landscape: Navigating the complex regulatory landscape is critical. Have you wondered how you could accelerate the development of new facilities while maintaining compliance with all current regulations? Your ability to adapt quickly to regulations is essential to avoid costly delays and make the most of growth opportunities.
- Innovative Design Principles: What design principles are you using to guide the creation of environments that promote the well-being and independence of older people? Consider how these spaces can be transformed into community living centers that meet the emotional and social needs of the elderly as well as their physical needs.
- Personalization of Services: Personalizing services to meet the unique needs of each individual is critical. How are you adapting your services to improve the experience and quality of life for older people? This personalization is the secret to standing out in a crowded market.
- Staff Competence Development: The staff who assist the elderly are the heart of your operation. Are you investing in the skills needed to ensure that these professionals can provide quality care and support? Fostering a culture of continuous learning is essential to maintaining high standards of service.
- Effective Marketing Strategies: In an era dominated by digitization, how are you implementing a marketing strategy that resonates with a wide and diverse audience? Your approach to marketing must effectively convey the values and quality of the services you offer, attracting new clients and retaining existing ones.
- Innovative Financial Models: Addressing rising costs and the need for long-term sustainability requires robust financial models. How are you using these models to support support and expansion in the field? Choosing the right financial model can facilitate lasting and productive investments.
- Emerging Innovations: The industry is at the center of an innovation-driven transformation. What emerging innovations are you considering to radically transform your service? Leveraging these innovations can give you a competitive advantage by improving the effectiveness and efficiency of your services.