The retirement sector continues to attract high levels of interest from investors, and we expect it to grow rapidly over the next 10 years into a firmly established part of the living market.
In light of the challenges of finding operating expertise, and the importance of care as part of the overall provision, we brought together a group of experts to explore the similarities and differences between the care and retirement living sectors and consider how those findings could move both sectors forwards.
Older people's expectations for their later years are changing: they have the ability to pay for a more aspirational lifestyle but also are willing to "buy now pay later". Current offerings are a spectrum from age-restricted housing, through service driven IRCs and to the more acute care settings but with a drive towards ageing in place, the IRC model is particularly well suited (and in other jurisdictions, well evolved) to providing a service in which residents can transition through different levels or periods of need. Where care homes are tending to need to be larger and providing more acute care than ever, is the logical setting for those alongside retirement communities?
Pairings of care home and retirement community operators has the added advantage of offering a full service whilst ringfencing the CQC regulatory risks for investors and operators. This pairing can be an educational experience for both parties and may further embed the concept of provision of a continuum of care and expand the offerings.
An alignment of care and retirement propositions will require some creativity and adaptability to find an appealing market offering in terms of tenure and affordability. This will also need to be workable for investors but a strongly attractive customer proposition tends to encourage investor appetite. Whether this will require sector-specific regulation to secure the interests of all parties remains to be seen, and there are certainly interesting developments in this area but we note this appears to be a common denominator in jurisdictions which operate successfully on a deferred or event fee basis.
Despite this, investor appetite in the UK retirement sector remains high but there is a challenge in the UK of finding suitable management teams. There is a significant risk/reward balance to be struck, and the skill set required is broad. Teams may need to look to both the care and hospitality sectors (amongst others) to find the right experience.
A further challenge to the retirement sector in the UK is perception. The market is still building awareness of the offerings but for most there is little distinction in their minds between retirement living and a care home and, whilst the latter tends to be a necessity, the former would ideally be a choice. For many, the first time they become aware of the distinction will be when they are forced, by need, to seek out a care home. For some this may mean that they have already missed the opportunity to enjoy retirement living and so there is an education piece to be undertaken. Social media has helped to enhance this process, especially as people become more aware of the damaging effects of loneliness.
Overall, we see that the future of the UK retirement living sector is bright, with a growing demand for innovative, integrated living solutions. Care home operators, by leveraging their strengths and embracing new opportunities, can play a pivotal role in shaping this future, creating communities that not only meet the needs of an aging population but also enrich the lives of their residents.
