Economy Watch: Prudential Predicts Real Estate Opportunity From Graying Population

The unprecedented aging of the global population could unlock significant real estate investment opportunities.

By Dees Stribling, Contributing Editor

Credit: PGIM
Graph via the PGIM report, “A Silver Lining: The Investment Implications of an Aging World”

PGIM, the global investment management arm of Prudential Financial, asserts that the aging of the global population—unprecedented in human history—will unlock investment opportunities in real estate, including but not limited to senior housing. Its conclusions are discussed in the recently published PGIM report, “A Silver Lining: The Investment Implications of an Aging World.”

As the population ages, the report noted, there will be a growing need to treat and cure related diseases—creating opportunities to invest in real estate required to house biotech startups, establish medical firms and create academic research centers. In addition, Baby Boomers are discovering the appeal of active urban lifestyles, forgoing single-family homes for centrally located condos in multifamily buildings.

Overall, the report found, demand for new senior housing units in the U.S. is expected to increase by 75 percent from 2010 to 2030. Investors should consider senior housing, PGIM asserted, because it’s a stable, long-term investment and, unlike most commercial property investments, much less sensitive to economic downturns.

U.S. regions with a high population density of people aged 65 and over (such as Florida, New England and the Midwest) are natural candidates for investment opportunities. But there’s also money to be made in the sector overseas as well.

For instance, there aren’t enough working-age Japanese citizens to support the growing, graying population, and the U.K. has an extremely low supply of senior housing. So in addition to domestic markets, the most attractive senior housing opportunities looking ahead are in Japan and the U.K., given demographic profiles and current supply conditions.