Recent plans to develop Northern Ireland's first dedicated retirement and assisted-living village (“RV”) in Carrickfergus marks a significant shift in the local provision of retirement housing.
With an ageing population that represents an increasing proportion of the population, the existing gap between supply and demand for retirement housing is now widening. In particular, affluent and well-informed individuals and their families are seeking facilities that support their existing lifestyles but the mid to high-end market is largely under catered for.
The consequence is that retirees are choosing to stay at their current residences given the lack of suitable and desirable alternatives, and a knock on effect is that in many cases larger family homes do not become available on the market for the next generation of family occupiers.
The Carrickfergus project is perhaps the first in what is forecasted to be a growing sector in Northern Ireland the coming years. Further opportunities may therefore be available for investors (both local and overseas) to take advantage of the current situation.
As a concept, RVs are popular with affluent retirees from the “Baby Boomer” generation who are proactively preparing for future care and are seeking opportunities to live in a community based environment that promotes independent living, with a high level of social interaction that sustains their current lifestyle. These individuals are typically from high socio-economic backgrounds and are less price sensitive to their predecessors. They are also unlikely to receive state funded support and are keen to invest in their retirement
As such, facilities that are tailored to individuals and provide bespoke care are appealing. Furthermore, owing to advances in healthcare, retirees are finding it easier to undertake medicinal programmes without supervision. This in itself contributes to lower levels of demand for traditional intensive aged care facilities. The Carrickfergus model of 361 residential units, a medical centre, nursing home, spa/wellbeing centre and neighbourhood retail would be typical.
Trends show that there is strong demand for RVs as operators in this space, often selling all their apartments off plan and experiencing large wait lists
Retirees tend to fund their senior living by unlocking equity from their family homes and research estimates that, in the UK, £800 billion of housing equity is currently owned by over 65s. As this age bracket is set to increase to 20% of the UK population by 2025, this presents a significant percentage of the market.
Despite the preference for RV accommodation, the statistics show that there is only one high-end retirement home for every 495 of the UK's high net wealth retirees over the age of 65.
The income structure of an RV in the UK is similar to those in Australia, with income generated via ground rents, care fees, general service charges and exit fees (the fees paid on any property sales when residents no longer reside at the property) which are typically set at 1-30% of the market value of the property at the date of disposal.
RV’s appear to be in demand and offer attractive returns. For these reasons there are ample opportunities for investors operating within the healthcare industry to invest in senior living in the UK.