Nine in ten real estate professionals expect demand for retirement living to increase over the next five years, making it the most popular residential asset.
According to research from law firm CMS, retirement living offers high levels of opportunity for the real estate sector, with 45% of respondents to a survey saying they believed it had the most growth potential.
The report, ‘Urban Being – The Future of City Living’, surveyed 6,500 people living and working in London, Manchester, Glasgow, Berlin, Amsterdam and Paris to find out what consumers like when it comes to their living environment.
Also interviewed were more than 200 global real estate investors, developers and agents in residential alternatives, including student accommodation, co-living, build-to-rent and retirement living.
Figures showed that 63% of respondents said retirement living was the most appealing asset class, second to distribution/logistics with 69%.
The report also found that those heading towards or at retirement wanted longer leases. This combined with a reluctance to spend as much as other age groups suggested many had not found a flexible rental product that suited them.
Interviewees felt city living would be attractive for older generations. As people remain healthier and more mobile, they will want to access leisure and entertainment in a city. More centrally located retirement living options could see high demand, the report said.
One of the interviewees, Charles Ferguson-Davie, chief investment officer of Moorfield Group, a UK-focused real estate, private equity fund manager, said the number of over 80s would treble in the next 30 years.
He also pointed out the over 60s own £1.5tn of UK housing equity, while only 1% of them live in specialist retirement accommodation.
‘Increasingly we are finding that this age group is looking to downsize and to release some of that equity from their home – for numerous reasons, from the house becoming unmanageable and wanting to use that money for their future care, to helping their children and grandchildren with a deposit so they can buy a home,’ Ferguson-Davie said.
Moorfield Group manages three funds, one of which is dedicated to senior living and owns Audley Group, a retirement village business.
‘The acceptance by the baby boomer generation that renting is an option in later life is perhaps a reflection of the changing perception and nature of later living accommodation compared to 20 years ago,’ said Ciaran Carvalho, head of real estate at CMS UK.
‘It is now societally more acceptable to retire to purpose built retirement communities as the quality of the product has vastly improved. One in 200 people in the UK aged over 65 live in bespoke later living homes. In the USA and Australia, it is one in 20.’