The average age of a British citizen has increased over the years. It is estimated that the number of people over the age of 85 will increase more than double in the next 15 years. NHS Confederation predicts an increase to 3.6 million people over the age of 85 in 2039 from 1.4 million back in 2014. The change in demographic opens up many opportunities in the assisted living market as a large number of the elderly retire unable to care for themselves physically, mentally and financially. https://seekingalpha.com/article/4182899-avoiding-pitfalls-senior-housing-investments
According to the Associated Retirement Community Operators (ARCO), the compound growth rate for assisted living facilities has increased 6% since 1995. Based on this information, many investors have predicted that the real estate market will double in 10 years.
The number of retirees that live in poverty is estimated at 14% by Age UK. Additionally, only 5% retire with their finances to be able to support themselves. The lack of facilities available to the elderly shows a great demand for care homes. These numbers indicate that the market for assisted living facilities is going to grow at a high rate.
By 2025, about 80% of the retirees will fall under mid to high affluence. This is largely because of the property market. Most of these people were able to become homeowners at an affordable cost as the real estate market was different in their youth. However, as they age they will no longer be able to live without assistance. Housing units that provide health care and assistance are growing in demand.
Currently, over 75% of the assisted living facilities fall within the affordable price range. Investing in real estate for this purpose is a good investment plan with great earning potential. Many of these homes provide individual units with a communal area and on-site health facilities. These are the preferred option for many retirees as it provides the care and privacy they need.
Perhaps the biggest market for assisted living in the UK is currently luxury care. Many people over the age of 65 that can afford the costs of retirement might not be able to live independently. Another reason for people to move into home care facilities in the sense of community that comes from living in homes like these. These luxury homes provide residents with plenty of independence and the opportunity to get involved with social events. Some investors have reportedly made profits of £2 million per home with these luxury care homes.
Investing in a care home does not require the investor to be present on the site. The investor can simply lease the property out to a care home operator. These leases are usually a long-term for a period of about 10 years and give the investor net yields of around 10% per year. The care home operator will run the facility on a lease and the investor receives a yearly interest.
The increasing average age of the UK’s population has created a massive demand for better facilities for the elderly. This need has also seeped into the political agenda. The market for mid to high care homes is set to increase dramatically and investing in assisted living facilities could double your investment in 10 years.