Senior housing investing continues to offer intriguing opportunities in the real estate market, but it is not without its short-term challenges. That’s according to the Emerging Trends in Real Estate report released last week from PricewaterhouseCoopers and the Urban Land Institute.

The report examines the effects of the global COVID-19 pandemic on all commercial real estate in the United States. Researchers interviewed 1,350 real estate industry leaders and analyzed survey data from more than 1,600 ULI members. Participants represented a range of industry experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants. Given the disproportionate effect of the virus on older adults, the effect on senior housing and skilled nursing has been less favorable, many said. 

Overall, the report ranked senior housing as a “fair” investment and development prospect for the commercial and multifamily subsectors in 2021, placing the property type as the No. 13 investment prospect and the No. 10 development prospect. Among residential property types, senior housing also was ranked as a “fair” prospect for both investment and development in 2021.

Some interviewees said that they would be avoiding any investment in senior housing for the time being, especially given the effects of COVID-19 and the complexities of operating such communities. Still, many interviewees said they believed that the demographic trends are positive for this subsector in the longer term, although some suggested that the operating model will need to change.

Participants pointed to the “headline risks” that the sector faces — the perception that living in a senior housing community is fraught with risk. Recognizing this perception, the report noted that many senior housing operators have been positioning themselves as a safe, hospitable and fully staffed place to live for seniors.

“With best-in-class practices being developed for infection control, sanitation, contingency planning and visitation protocols, the pre-COVID value proposition of senior housing will again be able to take center stage,” report authors said.