The general consensus in the property market pre-pandemic was that retirement living was one of the next biggest things, with growing investment and interest in this burgeoning sector.
It made sense when you considered the lack of provision and the UK’s ageing population, with a growing number of over-65s in the UK. As such, Andrew Fyfe – director of Sovereign Property Partnership, an independent living platform in Scotland - says interest and investment from institutional investors has risen significantly in the past few years.
But has the Covid-19 outbreak put an end to this?
“There were the beginnings of change in the retirement sector in the UK,” Fyfe says. “AXA, Legal & General and Goldman Sachs have all previously announced plans to invest in the retirement sector. The UK had its biggest ever investment year in terms of healthcare property in 2018, the majority of which was investment in care homes. However, there is a sub-sector for private-rented space aimed at seniors forming in the UK as investors graduate from the multifamily/private rented sector/student housing into the next most logical demographic play.”
This makes sense, Fyfe adds, when you consider how home ownership rates are declining. “It is likely that more older people will consider moving into the private rented sector (PRS) in coming years. A blend of products, including Build to Rent sector developments specifically geared towards older people, seem to make more and more sense, especially with ownership rates declining and average ages increasing.”
However, he doesn’t believe this sector is as simple as investing in other forms of real estate. “The retirement living sector should be viewed more in line with the hotels sector,” he advises. “Different facilities offer different levels of care, but there is a common need to provide services to some degree and often specialist services which require expertise.”
According to Joshua Chaffin, writing in the Financial Times, shares of Brookdale Senior Living, the largest US senior housing chain, have recently declined from more than $8 in mid-February, as the pandemic was taking hold in the US, to just under $3 at the beginning of last week.
“They have had to spend a significant amount of money on protective equipment and delivery of meals to residents in rooms,” Fyfe continues. “The healthcare element of these schemes can’t be underestimated, there is a duty of care to protect your residents and with that comes potential expense.”
All that being said, these are unique times, Fyfe contends. “For those who are handling the situation well, they may even gain a competitive advantage as their competitors fall away. This disease has targeted older people, and looking through a business lens, that is not likely to motivate investors in this sector, although the population is continuing to age rapidly so this may have a muted effect on appetite.”
He adds: “The fact remains that demand for a rental retirement living model will continue to increase as less people own their own home. McCarthy & Stone [the UK’s leading developer and manager of retirement communities] have recently offered this type of living in the UK.”
Fyfe concludes: “Investment in this sector might well be on hold, but it’s unlikely to stay that way in the long-term."
Guild Living submits plans for new later living development in Walton-on-Thames
Activity is still ongoing in the sector, which suggests some believe it will bounce back well from the Covid-19 crisis. Guild Living, in partnership with Legal & General, recently submitted a planning application to deliver a unique later living scheme in Surrey, offering tailored care and a range of facilities designed to encourage independent living and ‘reinstate older people back into the heart of the community’.
The proposals include the development and operation of 193 highly specified, modern apartments which meet the needs of older people within the local area. Facilities including the wellness centre and gym will be open to the public to encourage ‘connectivity within the local community’.
In addition to offering much needed-homes for Britain’s ageing population, Guild Living also hopes to encourage downsizing to free up family homes.
Guild Living says the provision of ‘discrete tailored care’ in its developments offers security that loved ones can live in a safe environment, whilst ensuring residents can remain independent members of the community.
Further to this, 26 care suites and three care residencies will also be available, offering intermediate care for those leaving hospital and providing the opportunity to help relieve pressure on local NHS services.
Guild Living and Legal & General recently announced a ground-breaking research partnership with the University of Bath to study the impact of loneliness on the older population. Nearly 10,000 older people are estimated to live alone in Elmbridge, Surrey, while almost half of older people across the UK say that television or pets are their main source of company.
The research aims to inform Guild Living’s decision-making around architectural design, technology, wellbeing and care across its pipeline of later living communities, and to specifically tackle older age loneliness.
“It has been great to meet so many local residents and have the chance to talk in detail about our vision for reinstating older people back into the heart of communities,” Eugene Marchese, founder & design and innovation director at Guild Living, said.
“There has been a lot of extremely productive dialogue and positive feedback from the local community. The human side of design is tremendously important and being able to work in partnership with communities is integral.”
He said that, across the board, there is a woeful lack of purpose-built accommodation for older people. “Our philosophy is that having centrally-located housing, which blends community facilities with care, means residents can stay active and healthy for longer.”
“Although our communities are designed with older people in mind, they are highly specified and will not feel institutionalised – we want people to live in beautiful homes that offer discrete, tailored care for when they may eventually need it.”
Guild Living is building retirement homes in central locations and on high streets, with the aim of reformatting retail centres and bringing older people back into the heart of communities.
Legal & General has made a 'bold £2 billion' commitment partnering with Guild Living. As well as Walton-on-Thames, Guild Living also has schemes underway in Epsom and Bath, with further developments planned.
While the current crisis may render the community mixing part of the plans redundant for some time – with social distancing measures in place – this submission for planning permission suggests that there are those who believe later living can still be the future.
And, in fact, it might actually be one solution to the UK’s adult social care crisis, which has been shown up more harshly than ever in the last few months as the coronavirus has wrought devastation in Britain’s care homes.