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June 5, 2017

The UK retirement housing market offers investors promising prospects, especially in the mid to upper tier market, according to new research from JLL.

Increasing life expectancy is driving strong re-sale and price growth in retirement real estate and, combined with a chronic undersupply in the mid to upper market, the sector is full of ‘untapped potential’.

Analysis into the performance of properties in the Housing with Care market, managed by members of the Associated Retirement Community Operators (ARCO), puts the compound growth rate for Housing with Care at 6.0 percent since 1995 with an average price difference between sales of just over £41,000. Based on this, JLL predicts that a retirement home would double in value in 12 years.

On the re-sale market, 80 percent of sales from 1995 have seen an increase in price, tracking wider house price movements.

And, while almost 80 percent of over 65s could be classified as mid to high affluence by 2025, largely as a result of house price wealth, 75 percent of the existing market is provided on an affordable tenure, meaning that there is a significant gap for new stock aimed at the mid to higher end.

This type of housing would include self-contained units with communal facilities and on-site care – the fastest growing form of housing in the retirement living sector.

“The housing with care market currently sits at 0.72 percent in the UK compared to five percent in countries like Australia and New Zealand,” says Philip Schmid, Director in JLL’s Retirement Living team. “The single biggest challenge facing older people in the UK is a complete lack of appropriate housing choices to suit their lifestyle, care or support needs as they age.”

“Our clients want to invest in the sector and evidence like this helps to show the long term performance encouraging investment and improving the choice and accommodation for our ageing population.”

As well as supporting the living needs of an ageing population, more investment into the retirement sector would ease the strain on other corners of the market.

Anthony Oldfield, from JLL’s Retirement Living team, explains, “While the untapped opportunities here is good news for owners, investors and developers, further growth in this sector will also ease strain on our overstretched health and social care service and could release thousands of family sized homes back into the market.”

“At a time when the funding and future of the NHS and the housing market are at the top of the political agenda it makes social, political and economic sense to incentivise greater development and diversity within the retirement living market.”

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Philip Schmid

JLL’s Retirement Living, JLL UK

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