The senior living sector has evolved during the last 10 years but much of the focus of retirement communities has been build-to-sell.
However, there are signs of change, as BNP Paribas Real Estate senior associate director, alternative markets – research Rebecca Shafran, explained to Real Asset Insight’s Richard Betts.
“I think we’re seeing, increasingly, investors and operators looking at how they can incorporate rental models into their schemes as a way of offering residents options in terms of tenure. Although that is emerging there are still very few doing solely rental – these are mostly pepper-potted amongst build-to-sell properties.”
Safran saidthat including rental homes within a retirement community is not very different operationally compared to the mainstream build-to-rent sector. “They are providing quality, environmentally efficient, purpose-built homes to residents, there is often an amenity offering, which we see in the build-to-rent space in urban locations, and it’s encouraging independent living but within a community and with some staff on site. So I think the similarities are there.”
However, she said there are obstacles such as investors’ concern about the reputational risk associated with homes for older people, despite the fact that the model is targeting people of retirement age so is quite different to care homes. “Care for the elderly is a much more sensitive issue,” she said.
There is reluctance from build-to-rent investors because pure build-to-rent still offers such a substantial opportunity.
“The surface has barely been scratched – we estimate that build-to-rent homes only account for 1% of the total housing market in the UK so there’s still huge scale for investors there,” she said.
There is a need to educate not only investors, but local authority planning teams, consumers, potential residents and their families about the societal and economic benefits that rented housing for seniors can bring, both to residents and local communities.
“In terms of health and well-being of the residents, preventing loneliness and economic benefits it can bring a local community, such as job creation.”
“There’s a piece of the puzzle perhaps still missing,” she said.