In the latest BossCast, Nick Sanderson, CEO of Audley Group, discusses the pressing need for better retirement housing, the scale of the investment opportunity in the later living sector, and why we need to rethink how we treat the country’s older population.
How, when and where people retire is a difficult topic of conversation for any family. People inarguably need more care and support as they age, but doing so without sacrificing their independence is a challenge.
Conventional wisdom holds that older people want to stay in their family homes, but surveys suggest otherwise. Two thirds are interested in downsizing, according to research from Hargreaves Lansdown.
However in the UK, living options for older people have traditionally been restricted to care homes or staying at home without the right levels of personal support. It’s a problem that Nick Sanderson, CEO of retirement community developer-operator Audley Group, thinks has much wider ramifications.
“When a review comes out on the pandemic, we will find that probably over 60 percent of the people who died were older people who were left exposed because they weren’t in the right sort of accommodation,” he says.
Audley Group was founded by Sanderson in 1991 as a way of filling the gap created by the under-supply of suitable housing for older people in the UK by creating a full luxury housing model without the care home and offering equivalent levels of support to people if they need it.
“I really wanted to take the business to the next generation,” Sanderson explains, referring to his previous business Beaumont Healthcare, which owned and operated more traditional care homes.
“We’d seen a lot of people moving into our care homes that didn’t need to be there, who could have stayed independent had they had the right level of support. So we built independent housing to give people the choice of living in a bungalow or apartment of their own, but supported by the care home.”
The model proved a success. Now, with over 20 retirement villages housing 2000 residents supported by 200 staff, the company has branched out to create more affordable options with Mayfield Villages, established in 2016, which will be opening its first location in Watford later this year.
The undersupply of adequate properties combined with an ageing population has accordingly created an attractive investment opportunity – and institutional investors are beginning to take note. Last year Audley Group entered into a £500 million JV with BlackRock to create 255 properties, marking the investment group’s entry into the retirement living sector in the UK.
There’s an upfront capital cost to construction, but as Sanderson points out: “What you create at the end of it is fabulously secure, long-term income from the operating of the assets.”
However, there’s still work to be done in encouraging older people to move to a home that better suits their space requirements. “Why is so much housing in the UK under-occupied when we have a desperate shortage of family housing?” Sanderson ponders. Key is creating “the right product to be attractive enough to downsize,” he says.
The later living model is much more mature in markets like New Zealand. “People often say to me, is it something where the British are different? Sanderson asks. “We’re not different. It’s much more a supply side thing, to be honest.”
But there also needs to be a political shift. “Older people are not considered to be politically or socially or economically significant,” says Sanderson. “This concept that you get to 65 and therefore you lose all political, economical or social relevance is something that’s held back so much of what should be happening to progress better alternatives for them.”
Ultimately, there will always be a high demand for later living housing solutions, especially as the proportion of older people in the UK’s demography continues to climb. It just so happens that looking after this vital part of our population isn’t just the right thing to do, but a great investment opportunity, too.