Why invest in Care homes?
Residential care home sector is currently worth £15.9 billion and is currently struggling with the high demand of elderly people needing home. For the first time the amount people in the age group over 60 (currently 14million) is now outnumbering the under 16 age group (currently 11.5million).
Between 2012-2032 the population of over 85s (the primary users of care homes) is expected to increase by 106%, and the total number of older people with care needs is expected to increase by over 60%. There is growing demand for modern, fit-for-purpose care homes, funded by private investment.
What is a care studio?
A care studio is a well-proportioned en-suite living space in the refurbished homes, designed to make life easier for the resident and take away the everyday hassles associated with living at home in later life. With interior design by leading care specialist’s particular attention has been paid to ensuring that safety features are incorporated, and consideration given at all times to the needs of those with mobility issues. Studios are provided fully furnished and ready to occupy, with a selection of colour schemes giving each space a unique look and feel, complemented by high quality furniture, fabrics, prints and accessories. All studios feature:
- Beautiful and luxurious interiors
- Fully Furnished
- High Quality fabrics and accessories
- Plasma TV
- En-suite Wet room
- Nurse Call System
How is the sector performing at present?
Homes which concentrate on privately funded residents, mainly in more affluent areas of the UK such as the south-east and south-west of England (where around half of all residents are self-funding) are performing well. Research by Knight Frank2 identified over a third of care homes assessed generating a return as a percentage of income in excess of 30%, with 9% generating profit margins of 40% or more. In contrast, poorly performing homes - generally more reliant on local authority funding which has reduced in real terms in recent years - are generating a return of 10-15%.
How does the investment work?
You purchase the 125-year lease of a care studio within the care home portfolio, at a discount on its full retail price. You will receive the title deed just like buying a residential apartment. We will then lease-back the care studio over 10 years from you for a price equal to 10% of your purchase price per annum. We will also market your care studio for residential sale, and buy-back the care studio for a 10% premium when we have secured a buyer, giving a quick, healthy return on investment. There is also a guaranteed buy back in year 5 at 110% and year 10 at 125%.
Why should I invest in refurbished traditional properties rather than new build?
Our projects are traditional Victorian or period properties that have retained many of their original features and generous proportions, and have operated as care homes for many years. We renovate them to a 5-star luxury standard - typically within a 3-4-month timescale - and relaunch them as luxury homes for fee-paying residents who then buy or lease their care studio, care and support from us. As we are refurbishing well-built, vacant properties we are able to get them back on an operational footing and fee-generating in a fraction of the time of a new build development, usually without lengthy planning applications. There are an estimated 80,000 units in current care home stock that are reaching obsolescence, so refurbishment opportunities are plentiful.