For new entrants into any sector, understanding the demand and viability of the market is essential.
As a recent entrant into the later-living market, Legal & General commissioned research demonstrating significant consumer demand, with 187,000 households over 73 who would consider moving to a retirement village this year.
However, only 7,000 new suitable homes are being delivered on an annual basis – evidence of a clear consumer need and commercial opportunity around increasing the provision of appropriate housing.
Those considering entering the later-living sector must choose which of two mainstream business models to adopt: one focuses on development profits and ground rent freehold sales for success, the other on longer-term operational revenues. The former is a transactional developer approach and the latter centres on the customer relationship.
Legal & General, through our partnership with Inspired Villages Group, chooses the customer-focused model. We both develop and operate our villages – meaning we have a long-term relationship with residents at the heart of our investment strategy. The success of this model depends on residents staying and being happy. They are our biggest advocate.
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We think a lot about the culture and core purpose of the business. We think about great architectural and interior design that helps older people stay active in later life. This is not just a house; it is an opportunity to provide our residents with a more mentally, physically and socially active lifestyle, in an environment that supports it.
As well as adopting the operator model, new entrants can join the industry shift towards greater disclosure and customer protection. The combination of the two would significantly increase consumer confidence and expectations and provide sustained benefits to both owner and occupier.
This is an exciting time for innovation in the sector, with rich opportunities for those prioritising a long-term relationship with their residents. The future commercial success of traditional players and new entrants into later living will be dictated by the consumer – as it should be.