UK Retirement Property: An Investment Case

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One Touch Property Investment

The Resilience of the UK Luxury Retirement Home Market

Property prices struggle due to stamp duty charges and Brexit yet the UK population fundamentals ensures strength in the retirement home market

PUBLISHED : Tuesday, 06 February, 2018, 5:54pm
UPDATED : Tuesday, 06 February, 2018, 5:54pm

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Investors’ appetites have been whetted by the appeal of luxury retirement home investments. Whilst care homes have been struggling in profitability due to tight local authority budgets, demand for the luxury end of the spectrum has been soaring and average weekly fees for some beds have increased by over 50% in the past three years. A good proportion of the elderly population can afford these kinds of fees as the over-60s have a considerable sum of £1,23 trillion in unmortgaged housing wealth according to Knight Frank. The overwhelming demand isn’t likely to be satisfied any time yet, as the number over 65s in the UK will grow four times faster than any other age group. The fundamentals and ageing population has enticed US investment trusts such as WellTower to invest heavily into the sector, and with Berkley Care Group claiming it makes £30,000 profit per bed before tax, it’s unsurprising why many investors are clambering over these opportunities.

County Durham has a sizeable elderly population with 19% aged 65+, and those aged over 65 are expected to account for one person in every four by 2030, so it is of no surprise that luxury retirement homes in Durham have been cropping up. They seek to tempt those living in the area who are considering a downsize move, or want to socialise outside of their own home. Windlestone Hall is one such iconic building in County Durham, previously being the birthplace of former Prime Minister Sir Anthony Eden. The building will be completely transformed into a luxury retirement community comprising 80 apartments and cottages. The Grade II listed hall will undergo sensitive refurbishment to create a selection of around 45 spacious en-suite apartments and part of the hall’s extensive grounds will be developed into a further 40+ luxury apartments, created in-keeping with the current building’s architecture and style.

To the south of the hall there is the beautiful North York Moors and Yorkshire Dales National Parks, and to the west lies the North Pennines Area of Outstanding Natural Beauty. The county town of Durham is just 10 miles away, characterised by its cobbled streets, boutique-style shops and striking Cathedral that sits on an elevated spot and enjoys stunning views over the city. The benefit of staying at Windlestone Hall is that the residents will be able to enjoy stunning woodland walks, explore the National Parks and surrounding areas, and take day trips to Durham. There is even a small farm and petting zoo nearby for the more nature-inclined individuals. Due to the luxurious nature of the development, high-brow activities such as wine tasting and fine dining take place on a regular basis, allowing residents to socialise with one another. Interiors are furnished to the highest standard, and offers gym facilities, an indoor cinema room and a hair salon to really pamper the residents.

Investors can purchase a suite at Windlestone Hall from £117,500 and will receive a net return of 10% over a 10-year commercial lease, with several buy-back options available in years 5 and 10 at an elevated price.

“The luxury retirement home sector has seen lots of interest from large investors, who are clearly onto something.” Says investment director Arran Kerkvliet from 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.”

It does not seem as though the appetite for luxury retirement property will be sated any time soon. There is a growing pool of potential occupants, and by 2045 it is estimated that over 65s will account for almost a quarter of the UK’s population, according to the Office for National Statistics. Development is already going ahead for a second luxury retirement home in London, and Knight Frank has cited a further £10bn of overseas wealth that is heading for the sector. With the swelling interest in Britain’s luxury retirement homes, isn’t it time the individual investor took interest?