Re­tire­ment vil­lages are now pro­vid­ing ma­jor in­vest­ment op­por­tu­ni­ties in NI

Belfast Telegraph - Business Telegraph - - Analysis & Company Report - By robert gib­son, Di­rec­tor of au­dit and as­sur­ance @grant­thorn­tonni Robert Gib­son can be con­tacted at Robert.gib­ Grant Thorn­ton (NI) LLP spe­cialises in au­dit, tax and ad­vi­sory ser­vices

Re­cent plans to de­velop North­ern Ire­land’s first ded­i­cated re­tire­ment and as­sisted-liv­ing vil­lage (RV) in Car­rick­fer­gus mark 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 to 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 fore­cast to be a grow­ing sec­tor in North­ern Ire­land over 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 than 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/well-be­ing 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 wait­ing lists.

Re­tirees tend to fund their se­nior liv­ing by unlocking eq­uity from their fam­ily homes and re­search es­ti­mates that, in the UK, £800bn 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 high­end 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.

RVS 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.

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