A recent report by JLL, Portugal’s leading real estate advisors, analyses the senior care home sector in Portugal. To download the complete report, click here.
The senior care home market in Portugal remains relatively undeveloped, with support for the elderly still mainly being provided by public and social welfare services in day care centres, “lares” and by the families themselves.
Nonetheless, recent changes in the Portuguese lifestyle coupled with the demographic changes (as Portugal’s birth rate drops to among the lowest in Europe) are modifying the senior housing market landscape. JLL’s forecasts point to an increase of 21% in those aged over 65 years from 2021 to 2035, totaling 2.8 million inhabitants. Of these, almost 1 million will be 80 or more years old.
Current supply in mainland Portugal amounts to 2,700 care homes, which are classified as ERPIs – Residential Structures for the Elderly. 66% of the units are public and 34% are private establishments. They offer in total an estimated 100,000 beds. More than half of these 2,700 care homes have less than 50 beds.
With 2.3 million elderly people in Portugal currently, the total number of beds in Portugal provides a national coverage ratio of 4.3%, below the 5% target ratio indicated by the World Health Organisation (WHO).
An analysis of the 116 larger care home units which have more than 90 beds reveals that 81% are managed by public institutions (approx 11,500 beds).
Of the total number of senior care beds in Portugal, less than 10% are managed by foreign operators.
In Portugal there are currently 11 private operators that develop and manage purpose-built care homes – currently with a total of 49 units and c. 4,000 beds. The existing stock is balanced in terms of supply although care homes with 50 to 89 beds represent 35% of the supply. The main operators are focused in Lisbon as 7 out of the 11 manage units in this district, covering 14 care homes and c. 1,300 beds.
In the next 2 to 4 years, an estimated 75 new senior care homes are expected to open in Portugal. Adding a further 8,000 beds to the current stock will translate into a coverage ratio that should stand at 4,3% by 2025, still below the WHO guidelines. In order to reach the 5% coverage ratio, JLL estimates an additional 17,000 beds will be needed by 2025.
Outlook
The upsurge in the number of seniors, longer life expectancy and growing elderly dependency will drive the increase in demand for care homes in Portugal. Although the market has been dominated up to now by public institutions, during the last years the number of private operators has increased.
Moreover, the entrance of international players with robust expansion plans into the market will increase the stock and bring expertise, investment capacity and know-how into Portugal from other, more mature, markets.
Portugal is becoming a leading retirement destination because of its climate, cost of living, and health care – and it also offers attractive tax exemptions for non-habitual residents. All these factors are driving demand in the senior living market, which is underpinned by an ageing population and a structural shortage of supply in the market.
To keep updated on how you can invest in Portugal, or if you want to move there for business or lifestyle reasons, make sure you get advance notice of our upcoming Chamber events, by registering on our Moving to Portugal database.