Developing and investing in senior houses in Finland

Abstract

Many countries have ageing populations, and changing population trends will influence the demand for houses and the type of housing required. Ageing population creates challenges for the housing market and homebuilders as well as providing new business opportunities. In Finland, the housing market is changing and responding to societal, economic and financial inputs. Finnish seniors prefer to age-in-place, but often senior citizens are living alone and the services served in their homes do not remove the problems related to loneliness. However, for society the most affordable way to take care of seniors is that they live at home as long as possible. Not many housing alternatives are offered for seniors in Finland. The development of independent living facilities called ‘senior houses’ has been increasing in the last decade. Senior houses are apartments for residents who are 55 years of age or over and who can live independently and take care of themselves. There are no regulations as to what kind of buildings can be called senior houses and there is no inventory of the number of units available. The senior housing market is still in its infancy and the market is dominated by few housing investors. The purpose of this study is to increase knowledge of the senior housing market in Finland. A core part of the study is the investigation of the preferences of senior citizens, with the aim to establish those matters that Finnish seniors value when they choose their retirement destinations, the kind of attractors they have and the services they prefer. The study also considers investors’ insights and raises issues concerning investment in new retirement communities, development of new business concepts and services offered. The findings of the study complement other international research on the topic. The evidence indicates that elderly people value location and neighbourhood services, and that public services are important for Finns. On-site services are not yet so important for seniors and retirement villages are not common in Finland. However, the use of housing services is increasing and seniors are more interested in age-restricted, purpose-built communities. From the investors’ viewpoint, there are many challenges in the Finnish senior housing market. Usually, investment and operational costs are higher in senior houses than in conventional houses because of better construction. The higher costs means that rents are higher. The challenge for investors is how to make senior houses attractive so that a senior customer would choose an apartment in a senior house instead of a conventional apartment. The study shows that once a lease-up occurs, the turnover is relatively low. Furthermore, senior tenants have no evictions, no rent arrears and no vandalism and hence represent lower risk. An added advantage is that senior tenants are in the main social leading to better community spirit.