Demand is high and this can be backed up by steady absorption levels along with the premiums paid due to the lack of supply. To date there is no rental product in the market, which is surprising, considering the number of elderly people who form part of the Private Rental Sector. Conventionally residents pay an above market rate on their home, a service charge +/- additional care, and typically 10-20% of the value of their home upon exit. A rental model could come in a number of forms, perhaps a lump sum to cover service charge and exit fees and then a ground rent to the Landlord. Whatever method chosen the industry requires more flexibility in order to drive absorption. Prices that are being paid at the moment mean a huge proportion of the market is yet to be tapped into. For example In Cullompton a 3 bed semi would set you back about £285,000. 8 miles down the road the same sized property in the retirement village of Millbrook will set you back £450,000 with a service charge of £888 a month. Clearly this will not suit everyone. The next article in this series looks at this issue in more detail and the different proposals available to combat this.
Still to date the smaller senior living providers, in the UK, struggle to find and develop land. This, in my opinion, is due to the fact that there are two businesses operating under the same roof. One is a hospitality driven product, offering residents a warm atmosphere with options to have additional services added such as a concierge, home maintenance and panic systems in place if they should so need. The other, without sounding course, is a conventional developer looking for a steady return as well as an exit. A number of new entrants into the market have focused on the former while struggling to source the latter (larger firms have less of an issues with this due to their ability to pull land and other recourses from different parts of their business). At Bisnow’s retirement living talk there were a number of providers agreeing the sourcing of land as well as the subsequent steps to follow such as planning were a constraint, with lobbying tactics in place to help secure the next available plot.
Perhaps the answer to this would be for developers to adopt a proportion of assisted living within their site, or partner with smaller Senior living providers to help mix the commercial and operational element of the sector together. This could also clear up any prejudice that senior living felt more like a separate bubble than the vibrant, bustling village they had been promised. This way residents could still enjoy the diverse nature of a town rather than feeling they are on the other side of 65. This could also encourage people to move into such arrangements sooner, offering investors a long term and a low risk return.
A recent study showed 85% of elderly residents would pay more for a green property than one containing no sustainable features. It was shocking the lack of innovation and motivation for going green there was within the field, with all providers in agreement that slapping solar panels on a roof would no longer cut it. COO of Inspired Villages Tom Lord argued a degree of preliminary planning was required to ensure a place was truly sustainable. District Heat Pumps, drainage systems & renewable energy were all things providers could work harder to integrate into design phases prior to construction. This could also be another opportunity for senior living providers to partner with top BREEAM rated developers to help encourage innovation. Latis aim to pave the way for innovative green solutions, a possible example includes green leases – which encodes sustainable policy into leasehold covenants.
If you searched for retirement living a decade ago, very little would show up. Now there is an array of results for these communities all over the globe. Latis communities will be designed in a way that facilitates the movement of people, encouraging interaction between residents of all ages, as opposed to separate bubbles that are commonly seen. Moreover, a collaborative approach is taken early on during the design stages to ensure the needs of all our residents are met, as well as having flexibility to adapt for the needs of future residents and their families.