Private retirement living is still at an embryonic stage in the UK, but investors are betting it will deliver, experts agreed at Real Asset Media’s Senior Housing & Healthcare Investment Briefing in London recently.
‘I cannot remember a time when there was so much new capital chasing healthcare in all its different forms in the UK,’ said Bruce Walker, CEO, Layland Walker. ‘It is a very interesting time to be in the sector’.
Many see it as a good way into sustainable investing and ESG compliance.
‘We see a lot of institutional investors focusing on senior living and healthcare, from European pension funds to US REITs to Asian capital’, said Candice Blackwood, Partner, Real Estate Group, CMS. ‘All are keen to tick that sustainability box and see sustainable investing as an opportunity, not a threat’.
Other attractions of the UK market are lack of product and relatively permissive regulation, although growing demand has pushed prices up at the higher end of the market.
Following the recent slowdown in the housing market, ‘developers building large housing estates in London and elsewhere are looking to change part of them into retirement living,’ said Blackwood.
The vast majority (99%) of UK retirement housing is either sold as leasehold or let at social rents through non-profit housing associations, according to Savills. Yet home ownership has declined significantly since the financial crisis and senior housing rental models are now emerging.
‘Now that Millennials prefer to rent it is no longer such a weird concept,’ said Blackwood. ‘I think it will become much easier for the senior living market to accept the rental model which historically they have felt less comfortable with’.
As they become acceptable, more investors and operators are looking at build to rent schemes.
‘There is huge appetite for the rental model,’ said Samantha Rowland, Director – Healthcare, Savills. ‘We will see a lot more of the PRS funds that are already here shift their focus to healthcare because of demographics and lack of product. It is a natural step up’.