Why is the Care Home Market Worth Investing In?

Sourced Midlands / March 8, 2019

Tags: Blog



It’s no secret that people are living longer these days. And that means more residential and purpose-built care facilities will be necessary to house and look after them – simply because the older an individual gets, the more likely he or she is to have care needs. Not only that, but as people age and their children leave home, many people actively want to downsize and have house maintenance needs etc. carried out by someone else (this is where luxury sheltered housing style communities come into the picture).

Here’s a figure to digest: according to the NHS Confederation, the number of individuals aged 85 and over is set to double between 2014 and 2039, meaning there will be 3.6 million in that age group - many of whom won’t be able to live independently. Unfortunately, X amount of this elderly population will be in various throes of dementia. Recent statistics by the Health and Social Care Information Centre, for instance, showed that the number of people in the UK with dementia jumped 62 per cent between 2007-14. Again, specialist care is needed here – much of which will be residential, especially in the latter stages of the disease.

Investor interest at a ‘historic high’

Upmarket estate agency Knight Frank recently stated that investor interest in the care home market was at ‘a historic high.’ They pointed to demand far outstripping supply, where much of the existing care home stock needed to be updated – to the extent it was becoming ‘a national crisis.’ They insist overseas investors in particular are keen to get involved in this sector due to its high income, ‘hands-off’ investment nature.

Luxury care home provision

Retirement and care homes (or even retirement ‘villages’) with luxury on-site facilities and visiting health care professionals, such as chiropodists and physiotherapists are becoming extremely popular with elderly individuals and couples. These individuals enjoy a high degree of independence and community living facilities - it takes away the stress of ‘keeping home’ with managed cleaning facilities and an on-site dining if required. There will also be visiting hairdressers, massage therapists etc., as well as regular activities such as outings and games evenings that residents have the option of taking part in.

Those living in such establishments tend to be younger; upwards of 65 years old and self-financing, having recently sold their home and benefitted from large amounts of equity.

Nursing care homes

At the other end of care home provision there are nursing homes. These rightly have high standards demanded by the NHS. In the case of the luxury living homes – you can rent out these purpose-built facilities to individuals or couples and bring in a facility management team (or simply rent the entire premises to a nursing home provider). They can be rented out as individual rooms in a home, or as the entire property itself. In such cases, it’s not unusual for investors to be quoted yields of up to 10 per cent a year.



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