Home » Real Insights » The rise of the elderly and the lure of the city: How changing demographics and urbanisation is impacting the living sector
The rise of the elderly and the lure of the city: How changing demographics and urbanisation is impacting the living sector
by Lois Jones
reading time: 13minutes
24. February 2025
The people living in the Hogeweyk in the Netherlands all have something in common: they are elderly and suffer from dementia. The world’s first ‘dementia village’ offers residents high-quality treatment tailored to their individual needs and a healthy degree of freedom, allowing them to live a semi-normal life, safe to even wander the streets despite the dangers posed by the chaos of their minds.
It’s an innovative solution to cater for the growing challenges posed by a rapidly aging population. By 2100, around a third (more than 30%) of the EU population is expected to be aged 65 or older, according to the World Economic Forum. Globally, one in six people will be 60 years or older by 2030, according to the World Health Organization.
So, what does this mean for residential real estate? The growing ranks of senior citizens means that there is vast potential for housing specially designed for older people, with services on demand for retirees, such as in-house medical assistance.
According to Dr Marcus Cieleback – PATRIZIA’s Chief Urban Economist – the cost of such services can be problematic. “If you think of seniors and retired people, the question is whether their pension is generous enough to pay for services on demand,” Marcus muses. “How can we create something that integrates these elements without financially overburdening people when they want to live there? What kind of structure can we create to make this affordable?”
An ageing population also means that we are gravitating more towards single-person households. When one partner dies, many of their surviving spouses spend the rest of their golden years alone.
At the other end of the age spectrum, growing urbanisation is fuelling a rising number of single-person households. Rents need to be affordable and attractive for young professionals, with apartments specifically designed to appeal to this target group.
Micro-apartments or co-living solutions are becoming increasingly attractive for young professionals. Co-living allows someone to enjoy the privacy of his or her own apartment yet enjoy a communal space, such as a shared kitchen or living room to take advantage of the benefits of community living.
Meanwhile, providing suitable accommodation for single-parent families also poses a challenge in today’s high-price environment, Marcus notes. “If you are a single mum with kids, then how can you survive in the current residential market and find a place to live and make ends meet?” he wonders.
Therefore, it’s essential to bear in mind the specific needs of different age groups when designing residential real estate. This can mean considering the needs of families with young children, the elderly who need added comfort or security, or independent living for people with disabilities. “As a result, these projects often become multi-functional developments sited within walking distance of key infrastructure such as public transport, green spaces, education, sporting facilities, and shops,” Marcus says.
Dr Marcus Cieleback
PATRIZIA’s Chief Urban Economist
PATRIZIA SE
Studying the market
“Despite all the discussion in the industry, only a certain group of people can realistically work from home. For others, mobility is a crucial element.”
Dr Marcus CielebackPATRIZIA’s Chief Urban Economist
Going forward, we will also see an increasing need for student housing as more young people pursue higher education degrees, Marcus posits. “We should accept that we live in a knowledge economy, in a service-based economy, where we need educated people,” he says. “As people try to get the best education possible, they will move around.”
Again, economics plays a role here. New student housing needs to remain affordable. Currently, a lot of students are being priced out of the market. The dilemma is how to provide student housing for households on a lower income, when families can barely pay for tuition fees alone, never mind accommodation on top.
Ultimately, it makes sense to create living spaces for tenants with mixed income levels in order to create a living cosmos that focuses on integration rather than segregation, Marcus states. “It doesn’t help if you concentrate low-income households in one building and down the road you have a building solely with people with a higher income,” he adds.
Staying in the cities
One trend is clearly here to stay: urbanisation. In fact, about 70% of the world’s population is expected to live in urban areas by 2050, according to data from the United Nations.
“Cities were created in the past as places of opportunity,” Marcus comments. “Low wage earners in particular continue to want to be in cities because this is where their jobs are.”
Living in the countryside, meanwhile, means that an employee either needs to be able to work from home or work nearby. “Despite all the discussion in the industry, only a certain group of people can realistically work from home,” Marcus says. “For others, mobility is a crucial element.”
This is why it’s important not to forget mobility when we talk about how we will live in future. Most cities are going to require more infrastructure, including better roads, improved bike paths and more interconnected public transport networks, Marcus states. “Otherwise, you can live in a nicely developed area but how are you meant to get to the place where you work?” he asks.
When will we see change?
Demographic shifts are undoubtedly driving change in residential real estate, although this is happening more gradually than originally thought. In fact, Marcus doesn’t expect any drastic developments over the next decade as the pace is held back by low levels of construction, currently lying at 0.5% of existing stock. “Everyone is interested in how we will live in 10 years’ time,” Marcus observes. “I always have a very simple answer to that: in 10 years we will live as we do today because over 90% of all housing units we will live in already exist today.”
Moreover, older buildings were built at a time when demographics were completely different to today. In the 1960s or 1970s single-person households were only a small part of the overall population. Today’s demographics, meanwhile, are moving towards a more single-person household structure.
As a result, change will emerge slowly over the next 10-20 years before we really reach a tipping point, Marcus says.
Investors need to adapt their view
Regardless of the demographic shifts at play, residential real estate will continue to stay attractive.
In summary, an increased interest in education will drive a need for higher quality student housing, where there is currently a shortage. The same is true for co-living, which can offer ‘relatively flexible and convenient options for renters in European markets at competitive pricing’. In addition, senior living will continue to grow in relevance in most European countries as people live for longer.
Traditionally, investors have tended to invest in either office, residential or retail real estate, rather than in mixed-use property. In future, however, they could benefit from adjusting their investment outlook as real estate becomes more multi-purpose in use. For example, people working from home might gravitate towards a co-working space where they can go when they are not in the office. The real estate industry will therefore need to consider how to integrate co-working into living areas to benefit residents.
While these changes won’t take place tomorrow, smart investors still need to bear them in mind today when devising their investment strategies for the next 10-15 years. By then, how we live will already look different.
