Alternative property investments are, almost conversely, becoming very popular. Their strong performance, driven by positive underlying market forces and portfolio diversification value make them attractive prospects for investors. Care homes are one of the key alternative assets that are investors are currently attractive and, in many cases, successful for investors.
About Care Home Investment
While care homes are not exactly something new, investing in care home units has only come to exist with any kind of prominence quite recently. The principal, however, is pretty straightforward and essentially similar to buying an apartment in a complex, or to purchasing other popular alternative assets such as student units. Investors purchase a single unit within the home, and benefit from returns when that unit is let to a tenant just as they would with any other property. As it is part of a larger, working care home the investment will usually be fully-managed, making it a rather hands-off asset to invest in.
About the Market
Care home investment has sprung up, and indeed has become popular, in no small part because of high levels of demand for quality assisted living space for older individuals. The UK has an ageing population; a large percentage of Britons belong to older age brackets and that percentage is continuing to rise. Currently, 18% of the UK population is 65 or over, and this is expected to increase to 25% by 2044. 8% of people in the UK are currently over 75, and this figure too is rising. Naturally, the larger proportion of older people in the population is creating more and more demand for quality care home space across the nation, particularly as the supply of beds has not been rising at a comparable rate. Indeed, there is a shortage of beds in care homes right now, with hospital beds being blocked by elderly patients who do not need hospital-level care, but who have no choice but to stay there until a suitable care unit opens up. The situation is exacerbated by cuts to public funding for the care sector, which fell by 18% between 2005 and 2014, leaving private companies to pick up the slack.
Investing in Care Homes
This has created a strong and undersupplied demand base for care units, and ensured that high demand levels look to be securely in place for the coming years. Against this backdrop, care home investment has proved to be something of an “everybody wins” scenario; care providers get funding for new ventures through investments, the nation’s older population benefits from much-needed living space, and investors receive strong returns from easy-to-fill and fully-managed properties. The attractions of care home investment are undeniable, and are very real. However, while many investors would do well to consider purchasing care home units, they would also do well not to let the attractions blind them to basic due diligence. Investing through reliable companies with a track record of success, and investing in quality units that people will be happy to place their older relatives in, are key to reaping the benefits this sector can offer.
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