The market for senior residences - France

1.2 A domestic market that is undermining the European market

It is possible to estimate market size using data from the biggest players in the senior residences market. France urbaine informs us that there are *** residences in France, offering **,*** units in ****. Some major players have more residences than others. The biggest players in this market are, in order, Domytis, Korian, Seniorales, les Girandières, les Villages d'Or, les Jardins d'Arcadie, les Hespérides, Emera, CogedimClub, Domus and Orpea . By referring to the annual reports of these players and the sales generated by them in ****, we can arrive at an approximation of the size of the senior residences market.

By adding up the sales of the main companies in the sector, we obtain a total of around ***.* million euros. We can therefore roughly estimate the French senior residences market at ***.* million euros in ****. The major players in this market have been able to adapt to market trends with *nd generation senior residences, which differ from *st generation residences in that they offer a range of services that cannot be individualized for seniors.

It is this second segment that is growing particularly fast (***). [***]

The offering continues to evolve, however, with competition from *st-generation senior residences, senior colocation and home services, threats to the ...

1.3 Interview with an expert on the French senior housing market

This interview was conducted by a Businesscoot analyst with an industry expert (***)

Les Pénates was created in March **** and plans to build structures dedicated to seniors in March ****.

The company takes its inspiration from the Nordic countries, where the concept of coliving is highly developed, a model that goes against the grain of senior residences, which often group together hundreds of people. The company aims to set up structures for * to * people, with large communal areas, activity rooms, a family reception area, lounges for seclusion and outdoor spaces.

These establishments are located in the heart of medium-sized towns (***), enabling seniors to enjoy a significant social life.

A market that will decline in **** and rebound in ****. Does this vision match your outlook for the senior residences market ?

Unfortunately, it does. New entrants won't have access to the market, as opening projects have been postponed due to the COVID crisis. The market will therefore contract in ****.

The outlook for **** is good, and serviced residences (***) are set to start growing again in ****. A survey published in June **** confirms this trend.

Seniors are feeling increasingly lonely. We're talking about a feeling here, because today's seniors are not the same as those of yesterday. They've ...

2.1 Profile of senior citizens in France

There are more and more senior citizens in France, i.e. people over the age of **. This is primarily due to a gradual increase in life expectancy, from **.* years at birth in ****, to **.* years in **** .

At the same time, healthy life expectancy at birth has followed the same trend, gaining *.* years in * years. However, there is still a significant gap between the onset of life difficulties and the death of senior citizens (***).

Life expectancy and healthy life expectancy at birth France, **** - ****, in years Source: ****

However, new-generation senior residences usually cater for people over ** who are still independent (***). [***]

In France, nearly three-quarters of people aged ** - ** are still independent. More broadly, only **.*% face severe difficulties that prevent them from living properly alone. [***]

Difficulties increase with age, with over **% of the over-**s facing severe care problems.

Care difficulties by age France, ****, % (***) Source: ****

Even so, the average age of loss of autonomy in France is **. Moreover, only **% of people over ** are dependent. [***]

The absence of difficulties for a large proportion of seniors probably explains why their median standard of living is equivalent to that of **-** year-olds, then in working life. With age, however, this standard of living falls by more than ...

2.2 Where do seniors live?

In absolute numbers, people over ** are most likely to live in the Île-de-France and Rhône-Alpes regions. These two regions alone account for *.** million people over **. [***]

Breakdown of seniors (***) by region, France, ****

Paradoxically, an analysis relative to the region's total population reveals that Île-de-France is the youngest region in France, with only **.*% seniors. Thus, the presence of a large number of seniors in a region does not necessarily mean that they represent a large proportion. The graph below illustrates the place that seniors occupy in each region, with New Aquitaine at the top, where over a third of the population is over **.** years of age, making it a particularly attractive location for companies managing senior residences.

Ranking of the ** regions with the highest proportion of senior citizens France, ****, % (***) Source: ****

2.3 Profile of seniors living in senior residences

When it comes down to it, seniors who choose to live in senior residences are pretty much the same as other seniors. The aim, however, is to make life easier for themselves, with fully adapted accommodation and residences offering care services and activities.

Source: ****

Senior residences meet the expectations of seniors who can decide on their own pace of life (***). [***]

The aim is to attract elderly people who live alone because they lack social ties (***).

2.4 Aging of the French population

In ****, France will have a population of around **.* million, according to INSEE analyses. One of the main characteristics of the French population is that it has been aging steadily for several years now. On January *, ****, the proportion of people aged over ** represented **.*% of the total population, compared with **.*% in **** and **.*% in ****. This aging, observed in most Western countries, is the result of a falling birth rate, supplemented by a falling death rate.

According to INSEE, if this trend continues, the French population aged over ** should reach **.*% in ****, then **.*% in ****.

change in the proportion of the French population aged over ** France, **** - ****, % (***) Source: ****

This trend will necessarily imply higher healthcare expenditure to keep the elderly in good health. by way of information, healthcare expenditure in France was ***.* billion in ****. For senior residences, this could represent a real boon, and should act as a growth driver over the coming years. More and more senior citizens are likely to want to move into these specially adapted homes, where they can recreate their social ties.

3.1 Market organization and dynamics

There are currently *** senior residences, of which around *** are managed by the players listed in the chart below. The two biggest players are Domitys and Korian, both of whom currently manage *** senior residences.

Number of senior residences by major players France, **** Source: ****

It should be noted that most of these players are solely managers of senior residences (***). This means that all their revenues come from the operation of senior residences.

However, other players have chosen to position themselves in this market, alongside another activity. Emera, for example, also runs medical establishments such as EPHAD for dependent people. DomusVi, for its part, also manages other types of establishment, such as psychiatric hospitals and retirement homes.

Other players are simply subsidiaries of larger groups, such as Les Seniorales in Toulouse, which has been a subsidiary of the Pierre et Vacances group since ****.

3.2 The changing business model for senior residences

The number of residences has risen steadily over the past decade, increasing *-fold in * years, from *** in **** to *** in ****, testifying to the sector's strong momentum.

number of senior residences in France France, **** - **** Source: ****

Most companies in the market offer senior citizens the opportunity to rent their homes. At the same time, these units are sold to investors who receive the rents paid by the seniors, less a portion levied for management of the residence.

This model represents a considerable departure from the first-generation residences, which mainly offered seniors the opportunity to buy rather than rent.

As a result, investors have gained a particularly important role in recent years, enabling the number of residences to grow particularly rapidly.

These investors benefit from an attractive rate of return of around *%, and low risk, since rents are guaranteed for * years. A number of tax incentives make the investment even more attractive, with tax reductions available via the Censi-Bouvard scheme and the status of non-professional furnished rental operator. [***]

More broadly, this trend is in line with the evolution of senior residences. The new generation aims to provide solutions to a number of problems encountered by the older generation:

Charges Property Location

Charges are more ...

4.1 Seniors' residences offer a full range of à la carte services and activities

Senior residences differ from senior villages or buildings in that they offer a number of services and activities, in addition to the rental or purchase of housing adapted for seniors.

It is these additional services that generate extra income for the management companies, over and above the fees deducted from the rental income. These may include entertainment or catering services, tailored to individual budgets.

The services and activities offered in senior residences can be divided into two broad categories:

Services included with the rent A la carte services (***)

Among the services included with the rent, teleassistance and the presence of staff in the residences are particularly important. Residents also have access to common areas and can take advantage of free entertainment.

4.2 Prices vary widely from one residence to another

On the whole, prices vary widely between different senior residences, depending on the standard of the units, their size and the location of the residence. Prices can range from a few hundred euros for the least expensive units to several thousand euros per month for the most affluent residents.

Source: ****

While Domitys is positioned for the relatively well-off, with average rents of €*,*** per month, Ovelia aims to attract more modest seniors, with rents below €*,*** per month.

In some cases, residences offer a range of services (***) to supplement rental income.

Prices for complementary services and activities vary widely. On the other hand, subscriptions are most often offered to enable residents to save money. In ****, * hour of pet walking cost **.** euros and breakfast cost *.** euros in a Domitys residence.

4.3 Relatively little direct competition

Senior residences face competition from a number of players, but their positioning is generally different.

While EHPADs are aimed at dependent seniors, and home help services are aimed at seniors who do not wish to leave their own homes, other offers are similar to those of senior residences.

For example, senior flatsharing and senior villages and buildings require seniors to relocate in order to regain their social ties.

Senior flatsharing can take a variety of forms, with people over ** sharing with each other or with younger people, which can sometimes enable some people to benefit from free accommodation in exchange for services.

The website Appartager, a specialist in shared accommodation, has noted a **% increase in the number of people over ** looking for a shared flat.

Closer to the real estate sector, companies like Arpavie offer to sell housing adapted for the elderly, but without any post-transaction assistance from the company.

The following table summarizes the differences between the most popular types of senior residences:

Source: ****

growth trends in the retirement home and personal services markets France, **** - ****, in Source: ****

4.4 A reminder of what senior residences are and are not

What senior citizen residences are

In the past, seniors' residences were managed by a syndic who offered limited services to residents, who generally owned their own homes.this was the model for "first-generation residences". Next come "second-generation residences", where residents are usually tenants. In addition, services are provided by independent contractors, and are often more extensive than in first-generation residences. Today, second-generation residences are in the majority in France.The French law of December **, **** on adapting society to ageing gave legislative recognition to senior serviced residences, defining them as "a group of residences offering a wide range of services.defining them as "a housing complex made up of self-contained units enabling occupants to benefit from specific, non-individualizable services". Senior residences can thus be defined as housing intended for a relatively elderly population, where the accommodation and public/collective spaces are adapted for simplified use, with services made available to users to ensure that their living conditions do not deteriorate as a result of their advanced age. In this way, a wide range of self-contained housing units (***) in specialized neighborhoods are offered to a population for whom living totally alone has become difficult, in order to preserve a certain degree of autonomy ...

5.1 New features introduced by the ASV laws

It was expected by professionals in the senior assisted living market that the **** ASV law would make a distinction between first- and second-generation senior assisted living. [***]

Two articles have been amended:

Article ** requires a distinction to be made between service providers and co-ownership syndicates. It also creates a distinction between non-individualizable services (***), the costs of which must be shared between owners, and individualizable services. Article ** specifically defines*nd generation serviced residences as allowing people to benefit from non-individualizable services.

The next law on the adaptation of society to ageing will promote home help by increasing the Allocation Personnalisée d'Autonomie (***) to a minimum of ***.** euros per month by ****.[***]

5.2 The shortcomings of some senior residences

Inspections carried out in senior residences have revealed management shortcomings in some of them, including insufficient information on prices. [***]

In fact, in **% of inspections, price information was found to be inadequate (***).

It has also been noted that the purchase of individualized services is not necessarily formalized in a document separate from the rental lease, which can lead to this can lead to a number of abusive clauses (***).

Price increases are also problematic in some establishments, since they exceed the limit set by ministerial decree. In ****, for example, the maximum price increase was *%.[***]

Senior residences need to make a clearer distinction between personal services (***), as this implies compliance with different rules. For example, it is necessary to obtain approval from the departmental council. [***]

6.1 Player segmentation

• Domitys Aegide
• Les Senioriales
• Les Villages d’Or
• Les jardins d’Arcadie
• DomusVi
• Colivio
• 1001 résidences seniors (Holding PR transition)
• Cap résidence senior
• Steva
• Ovélia (Vinci Groupe)
• Les Girandières - Réside Etudes senior
• Les Résidentiels
• Espaces et Vie
• Nohée - Cogedim Club
• Les Essentielles (GDP Vendôme)
• Réside Etude Senior
• Senior Transition
• Sopregim Les Hesperides