|04 February, 2018

Smart money will find its way to UK luxury retirement home market

Sponsored Content: Property prices have been under pressure post-Brexit, but as one quarter of the UK’s population will be over 65 by 2045, demand for the luxury retirement sector is expected to soar

Image for illustrative purposes only. Image supplied by One Touch Property.

Image for illustrative purposes only. Image supplied by One Touch Property.

Post-Brexit uncertainty, coupled with stamp duty increases, has led to testing times for the United Kingdom’s housing market. Despite this, investors are turning to the luxury retirement segment, in response to demand from an asset rich older generation.

While the country’s care homes for older people have struggled to maintain profitability as local authority budgets have been squeezed, demand in the luxury segment has grown rapidly, with average weekly fees increasing by more than 50 percent in just three years.

In the past, the luxury retirement sector was out of reach for the majority, but more older people are now able to consider it, with over 60s accounting for £1.23 trillion ($1.75 trillion) of the UK’s unmortgaged housing wealth, according to Knight Frank. The real estate agency also expects as much as £10 billion of overseas investment to pour into the sector in the coming years.

The UK’s over 65s age group is growing four times faster than any other group, meaning it will be some time before current demand for luxury retirement properties is met – a fact clearly not lost on U.S. investment trust Welltower, which has invested heavily in the sector. Berkley Care Group’s claim of £30,000 profit per bed before tax is also likely to prove tempting to investors.

“The luxury retirement home sector has seen lots of interest from large investors, who are clearly on to something,” says Arran Kerkvliet, investment director of property investment company One Touch Property. “The older population in the UK sit on a significant portion of the country’s wealth, so the weekly fees are not as unaffordable to them as they are for many others. Also, the retirement homes help to cultivate a feeling of fulfillment and wellbeing, which becomes increasingly important to them - and you can’t put a price on that.”

County Durham, in the North East of England, has a sizeable elderly population, with 19 percent over 65, a figure projected to reach 25 percent by 2030. As a result, luxury retirement homes, for those looking to downsize, or to live in a community with like-minded older people, are entering the market. An example is Windlestone Hall, the birthplace of former British Prime Minister Sir Anthony Eden in 1897, which is due to be transformed into a premium retirement community. The Grade II listed building will undergo sensitive refurbishment to create 45 spacious en-suite apartments, with part of the hall’s extensive grounds to be developed into a further 40 luxury apartments built in a style in-keeping with the existing building’s architecture and style.

The property also benefits from proximity to the beautiful North York Moors and Yorkshire Dales National Parks to the south, with the North Pennines Area of Outstanding Natural Beauty located to the west. The historic and picturesque county town of Durham, characterised by its attractive cobbled streets, boutique-style shops and the imposing Durham Cathedral, is just 10 miles away.

Windlestone residents can also expect a sociable atmosphere at home, with opportunities to take part in regular events including wine tasting and fine dining. Interiors will be furnished to the highest standard, and onsite facilities will include a gym, cinema room and a hair salon.

Investors can purchase a suite at Windlestone Hall from £117,500 and will receive a net return of 10 percent over a 10-year commercial lease, with several buy-back options available in years five and 10 at an elevated price.

The UK’s Office for National Statistics (ONS), expects that one quarter of the UK’s population will be over 65 by 2045, meaning demand for luxury retirement properties is unlikely to be met for several decades, thanks to a rapidly growing pool of potential residents. Therefore, it is no surprise that development is already underway on a second luxury retirement home in London, stemming from a joint venture between Audley Retirement and Apache Capital. As interest in Britain’s luxury retirement homes continues to grow, it is time for individual investors to take notice.

One Touch Property is a UK based property investment company, offering a range of investments from student property to buy-to-let. Contact them today to find out available investment options that can work for you.

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© Special Contributions 2018

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