Funding / Real Estate
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Retirement Communities: Smart Investments Hand in Hand with Positive Social Impact

3 Jun 2019 By Octopus Real Estate

Here, we explore the challenges and opportunities facing the retirement sector and the steps being taken by Octopus Real Estate to meet the growing demand for desirable retirement accommodation.

What does retirement living mean to you? What comes to mind at the thought of retirement communities? Old age and loneliness? Or maybe nothing comes to mind because they’re unfamiliar to you. At Octopus Real Estate we are focused on investing in exceptional retirement communities you would choose for your loved ones: aspirational housing and facilities that embrace the full potential of retirement living and make it something to look forward to and enjoy, as well as a rewarding investment for our institutional investors.

The over-65s age group is growing at three times the rate of all other age groups in the UK and, by 2035, it is forecast that this group will account for 23% of the population. The number of people over the age of 85 is expected to rise even faster – by 36% from 1.5 million to 2 million between 2015 and 2025.  These powerful demographic trends are driving long-term growth in demand for age-adjusted real estate.

A shortfall in retirement communities

With the UK’s population ageing rapidly, it is estimated there will be a shortfall of 60,000 to 228,000 retirement units by 2028. Approximately one in four over 65s has expressed interest in living within a retirement community but less than one in 10 will be able to realise this ambition, because of a lack of available age-adjusted real estate. Market penetration for retirement living stands at just 0.7% [of retirees] in the UK compared with 5-7% in the US and New Zealand. This suggests the UK market is ripe for investment, with demand for retirement homes outstripping supply by four-to-one.

 How can age-adjusted real estate help this group?

Age-adjusted real estate supports the retired population by providing homes that are attractive to the older population when they want to downsize from a family sized home, and which foster a sense of community. It helps ensure a greater quality of life through social interaction, whilst also allowing residents to maintain their independence. Octopus Real Estate creates retirement communities with operators that give residents the opportunity to spend as little or as much time as desired with other residents by offering communal and private spaces. Social isolation is an utmost concern for the older generation and retirement communities allay these fears and provide places for residents to surround themselves with like-minded people and engage in enjoyable activities. In addition, we invest in homes that have inclusive design principles built-in, to ensure that residents can live the independent lives they are used to, with features including height-adjusted appliances in the kitchens and step-free access throughout. Retirement communities provide high quality housing at an appropriate size, allowing residents to feel like their last home is their best home.

Octopus Real Estate – quality retirement living

At Octopus Real Estate, we are focused on investing in a range of quality retirement living alongside quality communal facilities. In other words, a range of options that meet residents’ needs. Our retirement communities are designed around the end user and encompass the following three key elements to keep residents comfortable, happy and safe:

  • High-end communal facilities including landscaped gardens, beautiful outdoor spaces, gyms, swimming pools, salons, lounges, bars and cafes (varying by location)
  • Hospitality that provides opportunities for residents to interact.
  • Provision of domiciliary care, so that care can be delivered in a resident’s home, as their needs change over time


Why Octopus Real Estate retirement communities work

Moving from a large family home to a retirement community can be daunting and poses many questions. What if I don’t have enough space? How will I feel about living in a new home? I am very accustomed to living in my current home and surroundings – what if I have to move away from friends or family? Our retirement communities are located across the UK and are developed to meet the needs of those in the local community and in locations that mean something to residents. At Octopus Real Estate, the retirement communities we invest in are perfectly sized to meet the needs of residents. Research has shown that many elderly people are ‘stuck’ in oversized houses because of stamp duty and other obstacles to moving. Our retirement communities give residents ample living space with additional amenities and services to enjoy a better quality of life and help ensure that their later years are among their best years. They also remove the stress of managing a larger property.

At Octopus Real Estate we understand that the social aspect of community living has been shown to improve happiness, well-being and mental health. Research has shown that retirement living leads to residents remaining healthier for longer and making them safer and less likely to have a serious fall or injury resulting in fewer hospital admissions. Residents are also likely to retain their independence for longer, alleviating pressures on the care system. This is why communal areas, community spaces and community living are key to our retirement communities.

It’s no surprise that there is growing demand from investors

As an alternative asset class, age-adjusted real estate and healthcare infrastructure is becoming more and more attractive to investors. Earlier this year we set out to assess the size of the opportunity for investors in health and social care infrastructure. Our study found that $200 billion is expected to be invested globally into the asset class in the coming five years.

We found that, in an era of heightened political risk, investors are increasingly turning to alternative assets for returns and are attracted by the long-term opportunity provided by healthcare and retirement real estate as the world population ages. This means that whilst 6.1% of the average institutional investor’s portfolio is currently dedicated to healthcare infrastructure – including retirement living – this is anticipated to grow to 9.5% by 2023.

As a growing asset class in short supply, health and social care infrastructure can offer excellent returns. We found that 71% of global institutional investors say their healthcare infrastructure investments are performing as expected or better. In the UK, 22% of institutional investors have over-performing investments in healthcare infrastructure with the country set to see more new inward investment in the sector over the next five years than any other country.

A shift to retirement living – the greater good

 And it’s not only residents and investors who would benefit from a shift towards retirement living, but there are also many ways that age-adjusted real estate can have a positive impact on the wider community, for example:

  • Releasing equity back into the property market – There is currently around £1.7 trillion worth of equity owned by the over-65 population which can make it difficult for others to get on and move up the property ladder. Retirement living presents a possible solution for the wider UK housing crisis, helping to free up housing stock for growing families as well as first-time buyers.
  • Creating new job opportunities – A new retirement community of 250 units creates, on average, 63 permanent jobs including grounds maintenance, management, care, leisure and retail roles. This gives a ratio of one permanent job per four units built, in addition to supporting the construction industry with every home built.
  • Easing the pressure on social care – Retirement living greatly reduces the number of hospital admissions. By some estimates, this could reduce costs to the NHS by 38%, saving £1,115 per person per year. This allows healthcare costs to be reallocated and reduces the cost of elderly care for the wider community.


This all sounds great but why Octopus?

Octopus Real Estate is a leading specialist healthcare infrastructure investor, with a proven track record of investing in and developing best-in-class retirement communities across the UK. We operate in growth markets and champion the benefits of these communities, allowing residents to maintain their independence whilst offering a sense of community to help combat loneliness.

We’ve seen that there is a desire from over-65s to move into retirement communities but stopping them is the fear of the unknown and a lack of adequate housing. Octopus Real Estate is on a mission to solve the issues discussed above, by tackling misconceptions and increasing supply. Ultimately, we want to change how people think about retirement – and how they experience it – whilst delivering healthy returns for those willing to invest in change.

We want people to be as excited as us about this new way of life so that, as a society, we can take steps to ease the pressures of an ageing population. Octopus Real Estate offers a brighter way where smart investments go hand-in-hand with positive social impact.

To get involved in retirement communities, speak with our expert team. Click here to meet Kevin Beirne, Director, Retirement

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