High-end ‘housing with care’ is one of the fastest growing healthcare real estate sectors as baby boomers seek alternative retirement accommodation
Flats on sale to the UK’s over 55s are undergoing something of a facelift as money pours into a sector dedicated to affluent retirees.
“Housing with care” is one of the fastest growing segments of the healthcare sector in Britain, catering to the first truly consumer generation. Born into the post-WW2 baby boom these retirees want freedom from the responsibilities of a large home in their later years and are shoring up demand for luxury, condominium style retirement flats.
Investment so far has come from American REITs and US private equity funds, who understand the asset class: on average 6 per cent of Americans live in this type of housing, rising to 12 per cent in some areas. But now other players are backing this market, including housing developers and traditional care home providers.
Philip Schmid, Associate Director, Healthcare, JLL Alternatives, says: “Baby boomers have seen house prices rise 4,300 per cent over the last 40 years and in 70 per cent of cases own their house outright.
“This increase has given them an asset base on which they can start to make more choices and take control over their retirement an they are seizing the opportunity to release capital from larger family houses by downsizing to help fund their lifestyles and maintain independence.”
People over the age of 65 now outnumber those of school age in the UK, and soon a quarter of the population will be over retirement age.
With advances in medical science bringing longer life expectancy and property remaining a secure asset, baby boomers are set to grow both in number and in wealth.
Anthony Oldfield, Director of Healthcare, JLL Alternatives, says: “If you look at these over-65s, a greater proportion of them will become affluent in the next 10 years compared with the wealth today’s over-75s have accumulated. In other words, the over 75-year-olds of 2025 will be richer than the 75-year-olds of 2015.”
However, the outlook for their health is not so rosy. Although older people may be living longer, many are doing so with chronic conditions. Care is a key ingredient in housing with care.
In addition to high-end modern design these retirement apartments offer a menu of care, which homeowners can rely on over the years to come.
Unlike a retirement home, residents buy their own home within the apartment block or “village” and so keep their independence. Included in the often-stylish development is a restaurant, usually parking and sometimes a gym, pool and hairdresser. Services include cleaning and maintenance, and when the time comes, nursing and potentially 24-hour-care
Despite statistics pointing to such a promising market for high-end housing with care, demand is outstripping supply.
Oldfield adds: “Our research highlights that there is only one tenth of the provision per capita in the mid and high-end markets compared to the existing affordable segment.
“As a result we see the housing with care market as one of the fastest growth sectors in healthcare akin to the growth seen in student housing ; driven in part by sheer weight of numbers but also by choice and the aspirations of retirees.”
Young at heart
Like student housing, what emerges as a trend in the UK is likely to spread to Europe as populations across the continent continue to age.
But what it means to be ‘old’ is fundamentally shifting. According to the retirees surveyed in The Colour Report – research commissioned by specialist developers of retirement properties McCarthy and Stone – old age starts after the age of 89.
The report also states that 12 per cent of the over 75s surveyed said they felt at least 20 years younger. A third said they were interested in the latest fashions and almost two-thirds owned a tablet.
Housing with care will be a key topic at the Health Investor Summit in London on 4th November 2015.
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