Demographics and international experience point to an underexploited opportunity
I read some research recently, from Key Retirement, that found one in five homeowners aged 65 and older are considering downsizing in the next five years. It also found that most cannot find the home they want. With the UK population ageing rapidly – the number of over-65s is forecast to grow by almost a quarter by 2025 – could this rapidly changing demographic present lucrative opportunities for property developers?
More than half a million buyers are waiting for smaller properties
The research finds that around 620,000 older homeowners want to downsize, but cannot find a property suitable for their needs. According to Legal & General, only 7,000 homes were built for this sector in 2017. Think tank Demos puts current demand at 30,000 per year. There is clearly a large shortfall: one that property developers could take advantage of.
Why do older people want to downsize?
There are many reasons why older homeowners may wish to downsize; some financial, and others for lifestyle. These include:
- For greater community, easier socialising, and access to leisure activities
- Worries about paying the bills on a larger property
- Concerns about maintenance and repairs
It is certainly not the case today that retirement living means taking things easy. Older people want to live near their grandchildren, and while they may desire comfortable homes in which to live, they also want security and to be close to recreational amenities.
What is important to older people?
Older downsizers want somewhere smaller to live, possibly also to release equity from their current home to help fund their retirement. They also desire properties that are large enough for guests and grandchildren to stay over. In addition, they need lifestyle facilities close to hand. This means:
- Two or three bedrooms
- A small or communal garden
- Close to local shops
- Near to leisure amenities such as bars and restaurants
- Highly energy-efficient homes
- Gyms, hairdressers and beauticians within walking distance
- GP surgeries and pharmacies nearby
- Little or no maintenance
Security is also high on the list of key wishes.
The types of property that these downsizers are seeking are somewhere between what they currently own and the care home satisfying the health needs of the very old age. Innovative developers could satisfy this growing niche, by building homes that provide comfort, community and security, and which will adapt to life as the resident ages – effectively, building mixed-use developments targeted at the rapidly growing and more affluent ageing population.
Opportunity for property developers and property investors
In other countries, retirement housing is more common than it is in the UK. For example, in the United States, Australia and New Zealand, you’ll find that as many as 20% of retirees live in purpose-built retirement communities. Here in the UK, this number is only around 1%.
If the ageing population of the UK follows the lead of developed countries elsewhere, demand for suitable properties in retirement communities could explode in the UK.
While the majority of such retirement community homes are likely to be owner-occupied, it’s probable that many such downsizers will choose to rent in retirement communities. This presents property investors with a unique opportunity to benefit from what could be lifelong tenants, willing and able to pay premium rental prices for the type of rental property that is currently in short supply.
Building retirement communities could be the next boom sector in the UK housing market. We’ve got the investors who could wish to take advantage of the UK’s ageing population’s housing needs. Have you got the property to satisfy them?
To connect your development with waiting investors, ready to buy today, all you need to do is contact Castlereach. Then let us do the rest.
Call us today on 0207 923 5680.
Live with passion
Brett Alegre-Wood