Retirement Living - A Property Opportunity?
Is retirement property the next big thing? Plowman Craven Director, Peter Folwell, considers the evidence...
Increased Activity
Retirement Living is a subject that is not only becoming more prominent in my own thoughts but also a sector in which we are seeing a lot more investor interest and activity. Goldman Sachs, AXA and Legal & General have recently announced planned investment while we are also seeing developers Pegasus Life and McCarthy & Stone moving forward with a number of schemes.
To gain greater insight and understand the possible opportunities in this sector I recently attended Property Week’s Retirement Living Conference. I left knowing considerably more about the market place and the real challenges it faces – economically, politically and socially.
We were pointed towards research recently carried out by Legal & General which suggested that there are now 3.1 million ‘last-time buyer households’ in the UK, with over 30% considering downsizing, clearly demonstrating the demand. Many of these have decided to stay put, perhaps due to cost, but mainly because of lack of property choices as just 7,000 homes were built in this sector last year.
Right-Size not Down-Size
It became apparent from the speakers that there are real social drivers that could push this sector forward. Research has shown that customers in this demographic value a lifestyle with enhanced facilities, that safety and security are very important and that future health needs can be catered for. In a wider context it also highlighted the role this sector could play in freeing up vast numbers of homes for families as ‘right sizers’ move to property more aligned to their lifestyle needs.
Economically, and particularly pertinent to the current climate, the point was raised about healthcare in the future. Not only the perceived wellbeing benefits of community living but also the practicalities and efficiencies achieved providing healthcare services for aged housing communities, reducing NHS spend. Also, if we stayed with the current model - care in individual homes – then the future demand for skilled home care assistance would be a total impracticality.
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A Vision for the Future
There are obviously political and legislative issues that need addressing – affordable housing targets, possible scraping of ground rents and a general recognition and classification of the sector. But there was definitely a real positivity about the potential of this sector, with a call to think differently on tenure models (rental, sale or a mix?), long term business outlooks and returns, partnerships and the like.
ARCO – the Associated Retirement Community Operators has put forward its VISION2030, committing to housing 250,000 people in the UK retirement communities by 2030. At current rates, there is a long way to go, but it does show the potential growth and opportunity that exists in the retirement housing sector.
* Peter Folwell is a Director at Plowman Craven and a leading expert in Area Measurement and IPMS. Some of his recent blogs are below.
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