MARKET POTENTIAL
Economic and Business Frame
Croatia has a very good geographical position as it is, compared to other Mediterranean main tourist destinations, the closest to the mainland Europe. It is located in South-eastern Europe and borders with Hungary, Serbia, Bosnia and Herzegovina, Montenegro and Slovenia. It has developed a good highway system (part of the European highway network) that connects all parts of the country. Seven international airports include: Zagreb, Split, Dubrovnik, Zadar, Rijeka, Pula, and Osijek. In Croatia, crime does not pose a significant threat to public security, it does not face significant terrorist threats and is considered a very safe country. The population is 3.9 million according to the latest 2021 Census, with a negative demographic trend. The capital city of Zagreb is the largest city, administrative, cultural, and economic centre, with 780,000 inhabitants.
Introduction/ Approach to Analyses
Assessing business potential of the subject investment is primarily based on demographic analysis and supply/demand ratio in senior care in the respective market. General trends relevant for evaluation of the potential demand are: − population aging – increasing number of citizens above 65+ and longer life expectancy are creating increasing demand for senior living market; − lack of capacity in senior care facilities and especially in high-quality segment in environment of increasing demand mitigates the market risk of the subject investment.
Demographic trends overview demographic trends Europe
The total population of the EU is projected to decline over the long term and the age structure will change significantly in the coming decades. According to Eurostat, the overall population is projected to shrink by 5% between 2019 (447 million) and 2070 (424 million)11. The median age12 of the EU-27 population has been increasing for years and is projected to increase at a similar pace for another two decades. The median age may reach 49 in 2070 – up around five years from today. As the median age increases, so does the number and share of people in the older age groups.
Total amount of older persons (65+) in Europe in 2019 was therefore 91 million, while by 2050 it is projected to rise to 130 million.
Senior Living Market Overview
Europe Market Trends Senior home sector in Europe is undersupplied. The equipment rate20 varies from 6% in Poland to 25% in Belgium21. The ageing of the European population will require a large increase of the number of beds in almost every country. By 2030, there will be 30 million people over 80 years, which will for sure be forcing further development of the supply.
Performance Benchmark
All senior care asset types provide a long-term secured rental income stream, which in many cases can be supplemented by additional revenues from a-la-carte services.
Senior Living Market Overview – Croatia Senior Care Homes Supply
The senior care equipment rate27 in Croatia is 12%, which is somewhere in the middle of European average. Total senior housing accommodation capacity in Croatia includes cca 25,500 beds. Out of these, 11,200 beds are in public facilities, 7,600 beds are in private facilities, while remaining 6,900 are small, not-institutionalized providers without professional care service (family homes, foster families, etc.).
Conclusion
Unaccommodated Demand Assessment In conclusion, our estimation based on conservative approach is that currently there are unaccommodated direct demand in amount approximately 3-4 times higher than capacity of the subject project, and even with future increase in supply, the subject project should easily achieve its fair market share.