Written exclusively for Expat Network by One Touch Investment.

Retirement property investments generate healthy returns and give the investor time to decide whether they would wish to move in at a later stage or use the rental income elsewhere. This is one benefit of investing in a unit in a retirement home. It’s also usually fully-managed, so investors only need to concern themselves with what they want to do with the rental income received, as the day-to-day management of the unit will be taken care of.

Four factors that make a good retirement property investment

An area with high demand

There would be little point in buying a student property in the middle of the countryside away from all universities, or in a town where the local university is able to cater for most students. Similarly, with retirement property older people tend to move away from cities and settle in quieter villages in the countryside or by the sea, so it makes sense to look for retirement complexes that are situated in these areas.

An area with an undersupply

Once an investment has been chosen in an area of high demand, the supply needs to be measured to allow for sustained occupation. The key is to uncover areas with a limited supply. Ideally, one would want to identify the demand in an area before other people have discovered it. Sometimes it is not always feasible to seek out undiscovered areas in the UK.

Actions from local government and national government means that sometimes development is limited. Local governments often restrict planning permission if an area becomes to crowded or for conservation purposes. More generally, national government building on vast swathes of land under the Green Belt (Protection) Bill 2017-19. These measures will limit competition from other developers.

Unique service

Investors need to ensure their product stands out from the rest. Is there a unique offering, or does the care home offer more advanced equipment than competing facilities in the area?

Sustainability of investment

After the previous steps have been followed, investors will want to analyse the sustainability of their investment. Investors will need to avoid choosing a property where there is a limited market and will need to be sensitive to political factors that could affect the longevity of supply.

For example, an investor may choose to invest in a retirement home in Portugal which accommodates British expats, but Brexit may affect the number of British people choosing to live in Portugal which would dramatically affect the income received. Investors looking to invest for long-term income will need to think long term.

The benefits of investing in retirement homes in the UK is that Britain has an ageing population and for the foreseeable future it is only going to get older. Last year the average age in Britain increased to 40, and the number of over 75s is meant to almost double by 2040 to 10m according to the Office for National Statistics.

In Northern Ireland, the number of over 65s is expected to increase 56.2% by 2043. The increase will allow for stable occupancy levels in care homes in the region and is a good indicator for future investment. The Court is a care home investment in Northern Ireland that is operating successfully. Investors can receive a 10% contracted return per annum for 25-years and can exercise a buy-back option from year 6. Rooms are priced from £71,950 and the unit is fully managed making it ideal for those who invest alongside maintaining a busy work schedule, or for those from overseas.

These are factors investors will need to consider if they are looking to invest in retirement property. For those looking to take the next step in retirement property investing, why not learn how to invest in the care home sector and what the differences are between nursing homes, residential care homes and later living retirement property. Alternatively, for more information on what to look for in a retirement home property, including the benefits and drawbacks of investing, why not read our full “what makes a good retirement property” guide?