With a steady increase in the number of students since the 1980s and a housing supply that is struggling to keep up, public authorities only cover around 15% of student housing needs. To compensate for this deficit, they encourage investors to intervene in the market by offering tax advantages...
Before 2009, senior residences were part of a special co-ownership regime. Shared charges were considered co-ownership charges, which imposed a significant financial burden on both occupants and owners. Since then, the services consumed have been distinguished from co-ownership charges, thus improving profitability for investors.
Senior residences...!
During the 1980s, senior service residences were governed by a special regime for co-ownership. Under this regime, all charges were pooled and considered as co-ownership charges, which imposed a significant financial burden on both occupants and owners.
Since 2009, the arrival of second-type residences has made it possible to distinguish between services consumed and co-ownership charges. This improves the profitability profile of residences for investors. In a context marked by strong demand and a scarcity of supply, downward pressure on yield rates is observed.
This trend highlights the importance of the quality of services in the valuation of this asset. Although unit sales remain predominant, the market is seeing the emergence of a growing number of institutional investors who are opting for block purchases. This strategy is based on the security offered by a very high occupancy rate and the sustained demand resulting from the increase in the senior population.
What attributes characterize the "Seniors' residences" asset ?
There are two distinct types of residences. The first type of residences are in the form of derogatory co-ownerships, where the co-ownership syndicates provide services that they produce themselves or that they buy in bulk. Service charges are considered to be co-ownership charges, whether the co-owners use these services or not.
These residences are designated as the first type because of their initial operating mode, but this model, which does not allow for individualization of services, is now tending to evolve towards the second type of residences established since 2009.
The second type of residences are in the form of common law co-ownerships, where the co-ownership syndicate is not responsible for providing services, because it is the service provider who directly offers its services to residents from dedicated spaces generally representing 10 to 20% of the total surface area. Thus, the condominium charges are distinct from the charges related to the provision of services.
These residences must offer three of the following four hotel services: breakfast, cleaning, provision of household linen and reception of customers, but they generally offer a wider range of services, such as restaurants, fitness rooms, swimming pools, libraries, etc. The critical threshold for a senior service residence is generally 80 dwellings, with a majority of T2. In all cases, the location of the residence and the reputation of the operator are the two most important valuation criteria.
What are investors' expectations ?
Signing a 9-year commercial lease with the operator ensures profitability since it offers the guarantee of paying rent to the investor on a long-term basis and for a fixed period, generally 9 years but which can go beyond. This is the first element explaining the appetite of investors for this investment product, whether they are national investors (bulk sale) or individuals (sale in pieces).
The second element is due to the advantageous tax regimes, which have greatly contributed to the development of serviced residences in recent years. Indeed, investors in this type of asset can benefit from several tax incentive measures. The Censi-Bouvard system is particularly advantageous for new properties.
In addition, as with all serviced residences, whether new or old, choosing the furnished rental regime allows the investor to recover the VAT levied on the property (in the case of new properties) and to amortize the entire cost of the property. These tax incentives are attractive elements for investors, thus reinforcing the interest in this type of asset.
What are the main criteria for evaluating senior residences ?
When evaluating a senior living facility, several criteria must be carefully considered. First of all, the quality of the operator is essential, which is reflected in its track record, financial strength and reputation. Then, the diversity and quality of the services offered play a crucial role: facilities such as wellness areas, swimming pools, saunas, tea rooms and libraries contribute to the attractiveness of the residence.
In addition, compliance with safety standards, accessibility for residents and hygiene standards must be rigorously evaluated. In short, these different aspects contribute to determining the value and overall quality of the senior living facility.
• Hotel services of the establishment: Breakfast, housekeeping, provision of linens, reception of customers.
• “Quality” approval of the personal service: (Mandatory since 2015) or Afnor certification.
• Housing typology: Studios, T1 bis, T2.
• Critical size of 80-100 beds: Allows for leisure spaces and full-time staff.
• Common area size: Between 150 and 1,000 m² depending on the size of the residence. Faced with aging, unclassified residences located in secondary locations disconnected from a growing competitive market, our experts often recommend considering repositioning on the rental market.
This strategy allows these assets to be revitalized by adapting them to the changing needs of the market and making them more attractive to potential tenants. This may involve renovations to improve facilities and equipment, as well as adjustments in pricing and services offered to better meet customer expectations. By reorienting these residences towards the rental market, owners can optimize their returns and ensure the sustainability of their investments in a context where demand for quality housing remains high.
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- See also !
Student residences
With a constant increase in the number of students and a housing supply that is struggling to keep up. To compensate for this deficit, they encourage investors to intervene in the market by offering tax advantages....
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