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It is understandable that those with savings will be extremely attentive when assessing any sort of investment. If you’ve worked hard all your life and have managed to save a little money, you don’t want to pour it into something that might not meet your financial objectives. Fortunately, if you consider the advice below, you can minimise risks.
- Choose somewhere in an area with a high demand
Firstly, you will need to evaluate the demand for the property type you are purchasing in that area. There would be little point in buying a student property in the middle of the countryside away from all universities, or in a town where the local university is able to cater for most students. Similarly, with retirement property older people tend to move away from cities and settle in quieter villages in the countryside or by the sea, so it makes sense to look for retirement complexes that are situated in these areas. Our UK retirement home investments are often situated in seaside towns in the south west of England, in counties such as Devon and Cornwall. In an area where an existing retirement village is located, one in four people are over the age of 65.
- Choose an area where there is an undersupply
Following on from point number one you’ve now chosen an investment in an area with high demand. The key is to uncover areas with a limited supply. Ideally, you would want to identify the demand in an area before other people have discovered it. Sometimes it is not always feasible to seek out undiscovered areas in the UK.
What is to stop other developers from recognising the appeal and lucrative returns, and building luxury retirement homes in areas that will eventually rival your own investment? You will need to consider the and barriers to entry. In areas such as Devon, there are lots of National Parks and Areas of Outstanding Natural Beauty, which must be conserved. Local government initiatives that control the supply of property can include restrictive planning permission for new build properties. Aside from local measures, the national government prohibits building on vast swathes of land under the Green Belt (Protection) Bill 2017-19. This means that there is only a limited amount of space to build upon, thereby limiting competition from other developers
- Unique Position or service offering
If it is the case that you invest in a city with lots of competition, you should choose a property that has a unique appeal. This could be the additional onsite amenities, the build quality, the historical aspect of the building or location. “Often our retirement home investment opportunities are refurbishments of Grade II listed buildings, and their historical heritage really appeals to the elderly generation. Our investments also include luxury amenities such as spa and beauty treatment centres, cinema rooms and fine dining experiences”. Says investment director at One Touch Property.
- Sustainability of investment
Once you have done your due diligence and have selected an investment in an area where there is an undersupply, it is time to start considering the longevity of the investment. You don’t want to pick an investment with a limited market. For example, you may choose to invest in a retirement home in Spain which accommodates British expats, but Brexit may affect the number of British people choosing to live in Spain which would dramatically affect the income you receive. Therefore, if you are looking to invest for long-term income, it is also better to think long term.
The benefits of investing in retirement homes in the UK is that Britain has an ageing population and for the foreseeable future it is only going to get older. Last year the average age in Britain increased to 40, and the number of over 75s is meant to almost double by 2040 to 10m according to the Office for National Statistics. This generation is also as wealthy as it has ever been, which Knight Frank estimating that over 60s in England alone have over £1,200billion in unmortgaged housing wealth, which means they are in a good place to afford the fees associated with luxury living.
One Touch Property makes quarterly visits to South Africa, where potential investors can book one-to-one UK property consultations. Alternatively you can download their bespoke retirement home guide to find out more information on the sector and why so many large corporate investors are considering the asset class.
Tel: 010 300 1200