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BLOG: Invest in retirement, and not just your own

Nick Sanderson
Written By:
Nick Sanderson
Posted:
Updated:
10/12/2014

Nick Sanderson of Audley Retirement Villages explains how tailored retirement accommodation presents a real opportunity for investors.

Recent census data has shown that one in six people in England and Wales are now aged 65, which is the highest proportion ever recorded at this age, and this is a trend we will see continue. Nevertheless the media and society choose to focus on the challenges this would bring rather than the opportunities.

Providers catering to the older demographic must innovate to meet the needs and ambitions, of this powerful and growing market and claim for themselves a share of this generation’s growing spending power.

One important area of retirement is where and how to live. Currently the options are poorly promoted and too much focus is dedicated to the care/institutional model which is less than ideal and naturally not a popular choice. Pioneering and sustainable alternative forms of retirement living will prove beneficial to residents but also to the investors behind them: it’s a win win situation.

There are huge opportunities for investors, and we need only look to the international comparisons for a sense of the scale that could be achieved. Currently market penetration in the UK is less than 0.5%, compared with 14% in the US and 8% in Australia. This represents less than 15,000 retirement living units in the UK as opposed to 160,000 in Australia. In relative terms and given the size of the population here it suggests that the UK could sustain almost half a million units.

There are also broader benefits on offer here. Recently Planning Minister Nick Boles has said that the Government has a ‘moral’ duty to force councils to find land to develop and prevent home ownership from becoming the preserve of the wealthy. However there is a significant amount of property that could be made available, mitigating the current shortage without the need for additional building or development.

According to the latest ONS General Lifestyle Survey more than 60 per cent of 60-64 year olds own their homes outright and in total the over 60s hold more than £1trn in housing equity. Many of this generation continue to live in the old family home, which has long since outgrown them, for sentimental and practical reasons. These properties are often unsuitable for changing needs, and expensive too. As the HAPPI2 report, which was published in November 2012, notes, if 2% (84,000) of the older people presently under-occupying their homes moved into tailored retirement housing, 400,000 people could find their housing needs met. Just last week, at the launch of the Association of Retirement Community Operators, Jack Dromey MP bemoaned the acute lack of specialist housing for older people in this country.

It is time we looked openly at what retirement means in a changing world and embrace the opportunities it represents across industry, business and society. Retirement living represents a very real investment opportunity and could also dramatically revolutionise the provision for older people across the UK. It is also one route in to the grey pound for investors.

Nick Sanderson is chief executive officer of Audley Retirement Villages