Perfectly manicured gardens, therapeutic pools, restaurants and state of the art gymnasiums. It might sound like a five star hotel except this place is staffed by 24-hour medical staff and inhabited by old age pensioners. It is in fact a typical description of one of Spain’s burgeoning luxury Residential Care or “Senior Resort” homes – a €2,400 million industry that has become one of Spain’s fastest growing business sectors since the turn of the new millennium. It seems that an increasing number of Spain’s 7.5 million over 65 year-olds are flocking to such homes which allow them to see-out the rest of their days in luxury with the security that staff are always on hand to help. Demand looks unlikely to diminish either – the government forecasts that by 2020, one in every four Spaniards will be over 65 making it one of the oldest populations in the world along with Japan and Italy.
Such a retirement doesn’t come cheap however. A room in one of these homes can cost anything up to €3,500 per month whilst the basic state pension in Spain stands at just over €700 per month. Nevertheless, construction is increasing at an explosive rate as much anticipated laws are expected to subsidise the industry whilst banks start to allow pensioners to use their property equity to pay for it all. According to Rafael Navas of construction firm Grupo Jubilo, “There isn’t a month that goes by without 2 or 3 new residences opening. We’ve already got about 700 in construction at the moment.”
One example in Barcelona is the exclusive Euroresidencias chain of homes in Les Corts and Sagrada Familia. For double and single rooms ranging from €1,720 to €3,555 a month (excluding tax), residents enjoy an array of specialised facilities including a specially equipped gymnasium, resident psychologists, hairdressers and chiropodists, electronically controlled beds, laundry service, tailored food menus and 24 hour medical assistance. Director Francesc Lorente says, “We’ve only been open a month but places are being filled rapidly. We’ve got around 50 rooms here with residents mainly aged 75 years and upwards. There aren’t many foreigners so far though except for one Cuban lady.”
A Euroresidencias room in Les Corts. Euroresidencias retirement homes are more like 5 star hotels.
What these sterile and homogeneous residences lack in character, they make up somewhat in ambiance with staff and residents appearing to get along like one big happy family. “This place is like a big house basically – everybody knows each other,” says Lorente adding that most are significantly more well-off than the average Catalan. “The vast majority of our residents are private although our other residences have a handful of Generalitat subsidised places for those over 75.”
So why this boom and why now? Spain’s rapidly ageing population has stimulated the emergence of two key factors. One is the much talked about “Ley de Dependencia” which is a contentious and ambitious government plan to comprehensively subsidise all “dependents” i.e. those needing full-time assistance. The other important factor has been the introduction of “Hipoteca Inversos” or “Renta Vitalicas” which allow pensioners to use the equity in their property to pay for the high costs of such homes. In the case of Hipotecas Inversos, banks such as Ibercaja, La Caixa and Caixa Terrasa are lending pensioners up to 80% of the value of their property. With Rentas Vitalicas, the bank “aquires” the property from the pensioner with an agreement to pay the persons residential care bills until they die which can be advantageous if the value of the property is particularly low. Other banks currently starting to get in on the act are Banco Sabadell and Ballesol and many others are set to follow in what looks likely to become a standard banking practice.
Spain's new Ley de Dependencia is aimed at helping those old people that require full time support while new mortgages offered by banks allow old people to use their homes to pay for their retirement.
Controversy obviously surrounds the morality of pensioners exchanging their hard-earned property for their retirement but public options are becoming increasingly limited. The government estimates that Spain only has an average of 2.5 nursing home places per 100 over 65 year-olds which is half the minimum amount recommended by the Organisation for Economic Cooperation and Development. The Spanish state has always relied on the fact that 85% of pensioners are cared for by relatives but this number is slowly on the decline as offspring face their own economic pressures and become increasingly mobile. As one OAP told the BBC, “Nowadays our children all have to make their own homes, look after their own families, their own children, so they don’t have time to stay with the old people.”
Those that cannot afford private care are offered a place in a publicly financed facility to which they have to contribute 80% of their retirement pension. If an elderly person has neither personal savings nor a pension, the state will look for a free place for them, but the person usually has to join a long waiting list. The fact that banks are increasingly prepared to use the equity in pensioners’ property to fund their retirement however could obviously change this situation significantly. According to Antonio Vintanel of Residential Caser, one consequence of this move towards mortgaged retirements could be the death of smaller, traditional residential homes as mega-conglomerates seek residential projects with the highest financial returns. “The sector is very atomised at the moment,” says Vintanel. “In the near future, there will be many construction group mergers and the entrance of foreign multinationals into the market.”
So far, Mapfre and Caixa Madrid have already joined forces in this area as have Gerogestión and Amma. BUPA (Sanitas) are one of the first foreign companies to have already jumped on the bandwagon and it is thought it will be followed by giants such as Ascott Group which has 16,000 luxury residential complexes worldwide. For those willing to stake their property on their retirement then, the number of private options is set to increase even more dramatically than it already has. According to official figures, at the end of 2005 there were around 265,000 residential rooms in Spain – a third more than 5 years ago – of which around two-thirds are private and the rest public.
80% of old people surveyed in Catalonia said they preferred home help than going into a retirement home.
However, despite the huge amount of expectation and investment, the industry might not sustain itself quite as long as investors are hoping. A study by the “Edad y Viva” Foundation found that Spanish pensioners are a stubborn old lot when it comes to leaving their homes. They found that in Catalonia for example, only 12% of those over 55 wanted to move into a residence of any kind – only in Castilla y Leon (7%) are old people less enthusiastic about the prospect. This is in comparison with Navarra (40%), Extremadura (30%) and Madrid (25%) where senior citizens were somewhat keener on the concept. Most significantly however, around 80% of all those surveyed said that given the option, they would prefer home-help over moving into a residential home. According to Josep de Martí president of Inforesidencias.com, “The simple reason for this is not many people can afford to pay €1,400 a month in a residence.”
Social practices and cultural attitudes in Spain also continue to have a strong influence according to Scott Eckstein of Senior Living International. “Compared to the USA, the centralized nature of the city is felt to be accommodating enough for seniors in Spain who have always fended for themselves within their little neighbourhood,” says Eckstein. “In addition, as in most of Europe, Spanish citizens have a strong sense of entitlement. The government has always provided healthcare and supported retirees with pensions and housing. Private solutions that place more of the burden of long-term-care in the hands of the seniors and their families would be a radical, but ultimately crucial change to the economy of Spain.”
Whether this diplomatically put “sense of entitlement” will stand-up to the will of the market remains to be seen.
