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Retirement Homes Continue to be Great Investment Opportunities

Ever thought of expanding your property investment portfolio with the addition of a retirement home? Well, with strong yields, long-term income and the aging population driving up demand, this could be the most promising opportunity you have seen in a while.

So many invest in housing, so why not join other property investors that have been driving up the volume of investment in nonconventional commercial property types over the past 15 years. Since 2004, investment in this sector in Europe has grown annually by an average of 25%. Amongst this classification are retirement homes, or care homes, which are a good option for anyone looking to diversify their portfolios and secure a stable and attractive income for years to come.

Ageing Population

Demographic changes are constantly happening all over the world, with the latest global trend being population ageing, which is especially true of most developed countries. According to UN estimates, the percentage of seniors over 60 years old around the world is currently 13%, with this predicted to rise of 25% by 2050, with the only exception being Africa.

In Europe, seniors in this age bracket currently constitute 25% of the region’s population, with the number of people over 80 years of age expecting to triple from 137 million in 2017 to 425 million in 2050 and reaching a massive 909 million 2100. With a vast majority of people in this age bracket needing homes that provide care and support, retirement homes are properties which may just benefit most as a result of this dramatically changing demographic.

Different Types of Retirement Homes

There are currently three different types of retirement homes in existence, the classification depending on the range of services offered. The types are: independent living apartments, nursing homes and home healthcare, all offering varying types of output yields for investors. However, one of the most attractive features of investing in retirement homes, regardless of the type, is that typically contracts are signed for between 15-25 years, providing a secure long-term rental. On average, depending on factors such as location and property quality, retirement homes yield between 5.0% and 6.5%.

Where to Invest?

In 2006, according to statistics derived from Savills, Germany, Finland, France, Sweden, Norway and the UK invested the most money in retirement homes in Europe. However, it has been said that the USA has the most attractive conditions for investing in retirement properties. Alongside the USA, there are seven other most favourable markets for this type of investment. These include Canada, France, Japan, Singapore, Germany and Qatar.

If you are interested in a market where the sector is just starting out, then Latin America may be the place for you, as there is currently only a small number of people aged over 80.

Overall, if you are looking to expand your investment portfolio and want to veer into nonconventional sector, retirement property may be a great place to move into next.

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