_Why is there growing investor demand in the seniors' housing sector?
Why is there growing investor demand in the seniors' housing sector?
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The living sectors are drawing an ever-deepening pool of investors – we take a closer look.
Why is investor demand increasing across the living sectors?
A variety of reasons, including tracking of the demographic cycle, inflation-linked cashflows, a demand/supply imbalance and greater comfort with operational real estate.
It's most significant in the seniors' housing sector. Why?
Baby boomers have reached retirement age and now have more accumulated wealth and bigger pension pots – so they tend to spend more compared to previous generations. They've also become accustomed to a higher quality of life and are prepared to pay for health/lifestyle services.
Dedicated seniors' housing is one of the solutions available to ensure this higher quality of life, thanks to benefits like on-site amenities, discreet on-site care and a range of activities to enjoy alone or with other residents.
What's the outlook?
We saw £2.5 billion invested in 2022 (slightly down from £2.8 billion in 2021) with volumes impacted by macro events, not least the Autumn mini Budget.
Investment is now set to grow year-on-year. Sentiment in Q1 2023 is more positive than in the final quarter of last year, and should continue to build throughout the remainder of 2023. The economy is emerging from over a decade of low base rates and this higher interest rate environment will lead to a divergence of sponsors, a wider spread on yields and potentially increased merger and acquisition opportunities.
Newly opened schemes at Riverstone Fulham, Mayfield Watford, Audley Sunningdale showcase quality retirement communities at a range of price points. Additionally, recent planning wins include Retirement Villages in Tunbridge Wells and Chester, Audley at Headley Court in Surrey, Rangeford Stapleford near Cambridge, and Inspired Villages in Horndean East, Hampshire.
Lastly, The Mayhew Review: Future Proofing Retirement Living was an excellent report published in Q4 which builds on other research looking into the demand for many more Integrated Retirement Communities in the UK. The government’s delayed taskforce for Older Persons' Housing is also coming down the line; this is being championed by ARCO, and we must all support this initiative when it finally commences.
Contact our Seniors' Housing team to find out how we can help you.
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