A new survey of housing investors claims they’re looking to ramp up their investments in the senior housing sector over the next 12 months.
The CBRE U.S. Seniors Housing & Care Investor Survey, results of which were published by Real Estate Weekly, found that 62% of real estate investor surveyed plan to buy more elderly living properties in order to boost the size of their portfolios.
“Senior housing demand should remain at relatively healthy levels through 2019, given expected steady economic growth and lower mortgage rates,” said Jeannette Rice, Americas head of multifamily research at CBRE. “Demographic trends are positive for the asset class, with the baby boomers nearing the traditional age for senior housing and nearly 9,000 turning 70 every day this year.”
There are different segments in the senior housing industry, the survey notes. For example “lifestyle” senior housing is a segment that caters to active seniors who tend to be slightly younger than the average resident, with fewer service options. The survey found that this segment has the most appeal for investors, with independent and assisted living both ranking in joint second place in the popularity stakes.
The least attractive senior living segment was Memory Care, which is form of long-term caredesigned to meet the specific needs of a person withAlzheimer's disease, dementia or other types ofmemory problems. CBRE’s researchers said the limited appeal of memory care homes among investors could be due to overbuilding in the sector.
The survey also identified investors’ concerns about the senior housing sector, which include operating and development costs, and oversupply in construction activity.
“With new supply beginning to taper, operators will leverage rent growth to help offset rising costs and maintain a healthy bottom line,” said Zach Bowyer, senior managing director of CBRE’s Valuation & Advisory Services. “We are beginning to see innovative design trends, operating models and technologies take hold as potential industry disruptors. It’s a very exciting time to be in this space.”