The Office for National Statistics (ONS) is predicting that 15 million people will be over 65 by 2030 and a number of commentators have suggested that the retirement housing sector is set for growth. Such a view may be supported by a Local Government Association report which states that only 0.06% of over 65s are living in retirement communities.
Is this because retirees don’t want to live in such accommodation or because there is an acute shortage? There are only around 735,000 dedicated retirement dwellings in the whole of the UK, so there appears scope for further development in this sector.
Even before the current COVID-19 crisis, the care home sector had been battered by rising costs and reduced government subsidies. A number of high-profile operators have run into financial difficulties in recent years, often caused by high leverage and inefficient operations. Full care homes are labour intensive and expensive to run, and this sector needs a fundamentally different approach if it is to regarding appeal with its investors.
However, retirement housing offering a degree of independence, whilst still proving essential communal facilities and assistance as and when required, will almost certainly grow in appeal. This sector can provide excellent returns for astute operators as costs can be contained and labour requirements lowered.
The challenge for smaller investors is how to access it successfully and reap the rewards in the years to come.