Millions of retirement homes needed to meet demand, says Octopus Real Estate
Octopus Real Estate estimates that there could be as many as 2.5 million UK retirees who would desire retirement properties, as Covid-19 highlights the benefits community living offers.
More people in the UK would consider moving to a retirement community as Covid-19 highlights the benefits of community living, according to latest research from Octopus Real Estate, part of Octopus Group, and a leading UK specialist real estate lender and investor.
The report, ‘Unlocking the retirement opportunity in a post-pandemic world’, highlights the gap between current supply and future demand for retirement real estate with Covid-19 causing many people to re-evaluate their living arrangements.
Octopus Real Estate estimates that there could be as many as 2.5 million UK retirees who would desire retirement properties. It is estimated that there will be 7.5 million UK residents aged 65 and over by 20692 and at present fewer than 1 per cent of UK retirees live in retirement communities.
The research highlights that there is a real need for operators, developers, and investors to work together to build more retirement communities to meet this demand. It also makes clear that more work needs to be done to educate people on the benefits of retirement community living.
Kevin Beirne, Director, Head of Retirement, Octopus Real Estate, says: “The global pandemic has been a catalyst for people across the country re-evaluating their living arrangements and retirees are no exception. The national lockdowns have highlighted the benefits that retirement communities offer. We know that, for the majority, retirement communities will not be the answer but to meet the growing demand of those that are interested, more communities need to be built. By doing so it will also free up more family homes and help unlock the UK’s property crisis. The opportunity in the UK for retirement community operators, developers and institutional investors to come together to create more choice for retirees is clear and in so doing we can play our part in helping to build back better.”
Nick Sanderson, Chair, ARCO and CEO, Audley Group, says: “This important piece of research is perfectly timed as the nation eases out of lockdown and we readjust our lives following a year of living through the pandemic. The real benefits that living in a retirement community brings is the freedom and protection that comes with having your own front door but with the added benefit of being supported by the team of dedicated staff and the community itself.”
The research revealed that many people did not understand what a retirement community offered, 79 per cent of respondents had not considered living in a retirement community and one third (33 per cent) of respondents were not able to identify what a retirement community was.
Many respondents were unaware that the lifestyle they desire in retirement is at the very heart of a retirement community. Once they were made aware of what living in a retirement community was like, their perceptions changed, and they said they would consider moving to a retirement village.
Retirees have an appetite to maintain an active and engaged lifestyle during retirement, those surveyed wanted to support their retirement lifestyle with facilities such as restaurants (53 per cent), coffee shops (50 per cent), social areas (45 per cent) as well as activities and clubs such as exercise classes (43 per cent) and swimming (42 per cent).
Kevin Beirne, Director, Head of Retirement, Octopus Real Estate, says: “Moving to a retirement village should be an empowering lifestyle decision – it is not about giving into vulnerabilities. The retirement community industry needs to work together to raise awareness and, in doing so, address the current misconceptions about the sector. It’s telling that over a fifth (21 per cent) of respondents believed that a retirement community was similar to a care home – the knowledge gap is huge and needs to be bridged.”
Katherine Rose, Director of Marketing and Sales, Elysian, says: “A particularly important finding that the research revealed is the level of respondents, over a fifth, who are still not clear of the difference between a care home and retirement communities. The assets provide very different lifestyles and support very different needs. There is an important role for the sector to educate and we should work together, as an industry, to highlight the benefits and the differences.”
Phil Schmid, Senior Director, CBRE, adds: “What is clear from the research is that retirees are seeking an alternative to enjoy their retirement and later life. Crucially, living in a retirement community will likely delay the need for more formal care and enable a retiree to realise their dream of enjoying retirement as the best years of their life.”
Top priorities for retirees include feeling safe and secure (49 per cent), an easy to maintain home (42 per cent), close proximity to a town centre/amenities (40 per cent), space for family/friends to spend the night (35 per cent) and technology enabled (25 per cent). And the most important aspect of retirement for homeowners over 55 is freedom to travel (64 per cent), relaxation (61 per cent) and time with family (60 per cent). All of these aspects are on offer at a retirement community. Event fees have long been perceived as a barrier to people moving into retirement communities, however, the research demonstrates that this may not be the issue, 85 per cent of those considering a move to a retirement community said fees (either a lack of understand or trust of them) had not prevented them from moving, while only 12 per cent of those who would not consider a retirement community said this was due to not understanding or trusting the fees.
Retirement communities offer an opportunity for operators, developers, and institutional investors to ‘operate and invest with purpose’ by developing modern quality real estate for the older demographic which is underpinned by environmental, social and governance (ESG) credentials.
Kevin Beirne, Director, Head of Retirement, Octopus Real Estate, says: “Although retirement communities are not new, it is still a nascent market, and the research gives an insight into the potential growth that lies ahead. There is an opportunity to create desirable homes that retired people want, and currently there is not sufficient supply to meet this untapped demand. The industry needs to work together to educate to ensure that the asset is better understood.”