Care homes are not the first places that come to mind when thinking about investing in property but it is an expanding area thanks to our ageing population.
Despite current economic uncertainty and rising costs, care homes are predicted to remain a compelling asset for investors seeking to establish a balance between taking a risk and earning a large return.
The proportion of the British population ageing into the 85+ years old age bracket is predicted to increase from 2.58% in 2022 to 2.71% in 2025. The ageing population can be attributed to several things, with the two largest factors being modern science, and a decrease in mortality rates.
This increase in age leads to the likely probability that more people will need to move into a care home, with their increasingly complex health problems resulting in live-in care.
Current projections indicate that the growth in the UK’s elderly population will potentially lead to a near doubling of demand for care beds by 2050, increasing by 350,000 beds against current levels of demand.
Care home closures and this growing elderly population mean that supply is failing to keep pace with demand despite a healthy new development pipeline. The UK elderly care market is at risk of reaching capacity by the end of the decade, heightening the need for new homes to be built and for existing homes to be future proofed and modernised.
This is not offset by the slow and steady increase in supply of elderly care home beds. Since 2012, en-suite provision in elderly care homes has risen from 62% of all beds to 73%, as new homes with en-suite bedrooms have been brought to market and older homes have closed.
Therefore, there remains a need for the development of modern, elderly care home accommodation to cater for the shortfall of supply.
The COVID-19 pandemic has put unprecedented pressures on operators and developers of elderly care homes. Infection control procedures are costly, and have been a key priority at the forefront of the entire Covid pandemic. However, with the pandemic measures significantly reducing, the investment and development markets for the sector are recovering swiftly.
UK care home operators have seen a 5% rise in occupancy and increased profitability as the sector recovers from the pandemic, according to global property adviser Knight Frank.
Investment across the European care home market has been steadily rising over the past decade, reaching a record high of €5.7bn in 2021. Total annual acquisitions have averaged €2.4bn since 2012.
There is also a counter-cyclical relationship between the performance of healthcare assets and all real estate assets during economic downturns, with healthcare real estate assets consistently outperforming.
Data from both UK and Australian analysts support this. According to NCREIF, senior housing and care is the only commercial real estate asset class that experienced positive rent growth during the Global Financial Crisis.
Rental growth has been steadier, less volatile, and has generally exceeded that of other commercial real estate property types since. Senior housing returns have annualised 11.6% in the 10 years to Q3 2020, comparing favourably to the 9.4% for all property, according to NCREIF.
Care home investments are the perfect fit for investors looking to expand their portfolios, or for those who are attracted to ethical investments aligning with personal principles or contributing to societal and environmental causes.
Care homes are also a perfect investment opportunity for buy-to-let investors as they offer regular income payments with no ongoing fees and are fully asset-backed. In fact, recent stats have shown that an investment in a care home – or rooms within a care home – can offer annual returns of 10% or more.
The increasing wealth of the ageing population provides a great opportunity for making an investment in the luxury care home sector, as people are retiring at a later age and therefore have more money to invest in their retirement. Luxury retirement care homes are also fast becoming a preferred choice amongst the elderly, and could be an alternative investment option to consider.
High yielding, hands-off investments like care homes have also become increasingly popular with overseas investors, mainly because they are fully-managed and pay regular income. If you’re looking for a quiet life with a regular income, investing in care home rooms is a viable and hands-free way of turning a profit.
Maintenance and the day-to-day running of rooms in a care home is usually a part of the deal, making this a handy hands-off investment. If, for example, you are currently a private landlord, there is likely to be a fair amount of maintenance requirements involved such as repairing damage to the property and carrying out annual checks on boilers and the like. In a buy-to-let care home arrangement, this is typically taken care of by the management of the home.
In contrast to a regular private rental, wear and tear is likely to be minimal as your residents will be older and less mobile due to the nature of a residential home.
The investments are also clearly structured and managed making this an easy-to-understand opportunity.
JaeVee allows investors the opportunity to invest in an experienced care home operator through its White & Sterling Residential Care brand. White & Sterling Residential Care possess a track record of operating care homes with their Heath House site in Norwich and they are now looking to expand their portfolio with an ambitious target of 600 rooms.
JaeVee currently has an investment opportunity available for investors with the White & Sterling brand for a new 64 en-suite bedroom care home. JaeVee is currently seeking investment of £2,122,131 across a 36 month term with a projected return on investment of 120.45%. For more information, please contact our investor relations team.
To see our latest projects available for property investment, please visit this link.
JaeVee joint ventures with experienced main contractors to bring residential schemes to life in the UK whilst helping to tackle the housing shortage problem. The structure of our model creates equity investment opportunities for investors into these projects, where investors enjoy the profits of a successful development without sacrificing their demands on control, protection and accessibility.
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