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Homepage / Assets / Service Residences / Rest Homes
Since the 1980s, residences for elderly persons (rest homes) have been subject to an alternative regime of joint ownership. All expenses were shared and assimilated into joint ownership, weighing heavily on occupiers and owners alike. Since 2009, the arrival of “second type residences” has made it possible to distinguish between services consumed and joint ownership charges. This improves the profitability profile of such residences for investors. But in a context of high demand and supply shortages, however, there is downward pressure on rates of return. In this context, the quality of services is a fundamental element in the valuation of this asset.
While unit sales continue to dominate, the market has seen an increasing number of institutional investors buying in bulk and therefore opting for a secure product due to a very high occupancy rate and a strong demand linked to the growth of the elderly population.
With longer life expectancies, rest homes have a future, as do nursing homes. These homes for elderly people aged between 75-80 (on average) offer services reserved for residents (excluding medical care). They represent 1.3% of the non-medical nursing homes in France, compared to 4% in the United Kingdom and 7% in Quebec. Demand will increase gradually by 2050. In addition to first-generation residences that pooled all charges, “second type residences” offer a better profitability profile. Since 2015, a "quality" accreditation of personal service has made it possible to assess the adaptation of services to the needs of residents.
With this type of asset, investors rely on a secure product: the supply of rest homes is below demand and their occupancy rate is around 98%. Not to mention that residents benefit from many types of assistance: Independence Social Allowance, Personal Housing Allowance or Social Houisng Allowance. Commercial leases with operating companies guarantee buyers visibility for at least 9 years. Investors prefer to look for nursing homes located in urban areas within large and medium-sized towns, easily accessible by public transport, with a high quality of service.
The following criteria that must be carefully considered when valuing rest homes for the elderly: Operator quality (which includes its references and financial resources), diversity and quality of services offered (well-being area, swimming pool, sauna, tea room, library), compliance with safety standards, accessibility, hygiene, etc.
When our valuers are confronted with the valuation of rest homes that are unclassified, positioned on secondary sites and disconnected from a growing competitive market, they can advise clients to consider a repositioning within the traditional rental market.
Our real estate experts bring you an answer adapted to your needs
*Mandatory fields
BNP Paribas Real Estate Valuation France, a simplified joint-stock company registered at 50, cours de l'Ile Seguin, 92100 Boulogne-Billancourt, acting as Controller, processes information about you for the purposes of keeping statistics and executing any requests submitted to us through the website and, in some cases, for the purpose of sending you commercial solicitations (based on your consent or any applicable regulation).
For more information about how BNP Paribas Real Estate Valuation France is processing your personal data in this context and an explanation of your rights (including a right of access, rectification, objection to direct marketing and a right to set guidelines with regards to the use of your personal data after your death, as well as, in certain circumstances, a right of erasure, restriction of processing, data portability and a right to object to other forms of processing) and BNP Paribas Real Estate Valuation France's obligations in that respect, please consult our Data Protection Notice available at : https://data-privacy.realestate.bnpparibas/
