Chauffeur-driven cars and 24-hour room service: inside the retirement homes that feel like hotels
A chauffeur-driven BMW sits out front, ready to whisk you to Sloane Street for shopping. A bellhop stands in the lobby to take your bags, before you dig in to supper, ordered through 24-hour room service.
It feels like a high-end hotel, with slick interior design that makes it resemble a Soho House members’ club. But look a little closer, and you will find this residence is something quite different: an ultra-luxurious retirement community.
At Battersea Place, where over-65s live in large, light-filled apartments overlooking the park with their pets, residents’ medication is served on a silver platter and a nurse is on hand around the clock. There is a cinema, a craft room, swimming pool, and a gym filled with equipment designed for older bodies. There are helpers on hand to do residents’ shopping; upstairs, there is a care home offering long-term nursing and palliative care.
“This is a huge market – and will grow as a result of the looming demographic timebomb of retiring babyboomers. By 2066, one in four of the population will be aged over 65”
n a soon-to-be built development in Chelsea by Auriens, supercar brand Bugatti may be drafted in to create stairlifts. A one-bedroom apartment here will set you back £3m – plus monthly service charges likely to be in the thousands.
This is the very top end of the UK’s burgeoning retirement home industry – although don’t use the “R-word” around Auriens’ co-founder, Johnny Sandelson. “If you use the words ‘retirement’ or ‘care home’, it dampens the spirit and we want to create a place that heightens the spirit,” he says. His development will have sensors in the floor which alert staff if a resident falls over, with interiors designed by the same team behind the Langham Hotel.
These high-end homes are selling like hotcakes – despite the fact that issues such as uncertainty caused by Brexit and stamp duty changes have slowed the housing market at the very top end. The reason for continued demand is their scarcity: the retirement sector is particularly underdeveloped in the UK, where just 0.7pc of over-65s live in a retirement home with care facilities, compared to 6.1pc in the United States and 5.4pc in Australia. For the 11.8m over-65s in the UK, there are only 66,700 of these assisted living homes available.
“Despite the high rates of stamp duty, people still want to make the move,” says Nigel Sibley, chief executive of LifeCare Residences which runs Battersea Place. “Often this is not a discretionary purchase; they need it to retain their independence.”
The lack of retirement or assisted living homes has caused a logjam in the UK’s housing market, with vastly increasing levels of under-occupation as older people have nowhere suitable to downsize into, but a potentially huge chunk of equity to invest in these properties.
According to Savills, 3.1m owner-occupied households over the age of 65 are under-occupying their home (leaving two or more bedrooms empty), sitting on an equity pot of £970bn.
Analysts estimate that last year just 96,000 owner-occupiers downsized, selling property worth £44bn. Assuming that they unlock one third of the value of their property when they downsize, they could buy property worth approximately £30bn.
This is a huge market – and will grow as a result of the looming demographic timebomb of retiring babyboomers, according to Henry Lumby, who runs Savills’ Retirement Living division. By 2066, one in four of the population will be aged over 65.
As a result, money is pouring into the sector and Lumby estimates that within five years £5bn will have been deployed into retirement homes of all types by investors from private equity, family offices and pension funds. These are groups that are currently investing in other areas of property such as the private rental sector, student housing and the London new-build residential market, but are now shifting their focus. Investec has funded Auriens’ new venture; Oaktree Capital management has invested in high-end provider PegasusLife; and Moorfield’s specialised fund has backed Audley.
Much of this funding is coming from abroad, particularly institutional investors from the United States and Australia, “because they know the model works and have seen it work”, says Katherine Rose, the marketing director of Audley, a high-end retirement developer.
Cliff Cook, the founder of LifeCare Residences, which owns Battersea Place, made his money setting up the same model in New Zealand and saw opportunity in the UK.
Retirement property is on its way to becoming a real asset class, adds Rose. The assisted living properties, which provide nursing care and operate services such as restaurants and swimming pools, come with a fee structure with a long-term income, on top of revenue from the development itself, selling off the properties.
“This makes it hugely attractive to the institutional investor, which is why our latest fund is made up of these ones in Europe and America,” she says.
There is “still work for us to do as a sector to make investors comfortable about investing in it,” she adds. This is being helped by new planning regulations and legislation which will help reduce risk and make it into a more acceptable asset class. It is not just the high-end homes that are receiving this investment, but more mid-market offerings as well, including those without the round-the-clock nursing care package.
But at the top end there is huge opportunity: JLL argues that 75pc of the current retirement housing with care is “affordable”, leaving a significant market for mid- to higher-end homes. It says that by 2025 almost 80pc of over-65s will be classified as mid-to-high affluence, mostly due to house price wealth.
Some developers have been building high-end retirement homes in the country for a while; selling buildings that resemble grand manors, complete with wood panelling. But they are now waking up to building these homes in the very centre of the city, says Lumby. “Baby boomers are not moving to the country or coast, but staying close to their local network of family and friends, shops and the theatre. The urban model is very important and fast-growing. The capital has not become as prevalent with retirement home builders because of land values – they had to be semi-suburban.”
There is a huge deficit of retirement homes of all price levels in the capital: in the London Plan, set out by the Mayor to assess housing need, 2,620 private units were identified to be delivered in 2015, but in the last three years just 108 units were completed.
“More are coming but we need one home every few streets to meet the need,” says Lumby. “It should be a core focus for the Mayor of London. It’s about recycling the housing stock but not forcing people out.”
This could be all changed thanks to the recent downturn in central London’s property market, says Auriens’ Sandelson.
“Up until now, if there was a good site in central London there was a wave of money and people wanting to buy apartments from a private residential developer, who would maximise returns by building a normal block of flats. Whether they were lived in was by the by. Now that there is a slowdown, there are more opportunities for people in my space to put this land to different use.”
Expect more of these in central London: LifeCare Residences is setting up another version of Battersea Place in Hampstead and a Singaporean company, City Developments, plans to build a retirement home in Knightsbridge, where a regular apartment costs £4,000 per sq ft. Sadly its plan to build a tunnel straight into Harrods has been shelved.