The last few weeks we have been discussing the various changes and regulations impacting the senior housing market. From the rule changes affecting new senior housing construction to CMS ruling no more arbitration, it can be hard to keep up with all the SNF news these days. One bright spot we came across is the fact that more and more investors are turning their interests – and bank accounts – to senior housing. For the second year in a row, senior housing was named the most attractive asset list when looked at in comparison to other commercial real estate sectors. This survey was conducted by the National Investment Center for Seniors Housing & Care (NIC) and National Real Estate Investor (NREI).
There are numerous reasons why senior housing is such an attractive investment, some of which you may be able to guess. As Baby Boomers continue to reach the age of needing the assistance and support of nursing homes, we are seeing facilities make adjustments accordingly. These days, technology is a huge factor in SNFs, as are open floor plans that accommodate CMS’ new rulings. With this in mind, senior housing investors are changing their strategies and focusing on acquiring properties that have either been run by long-time operators or are in need of a tune-up. One industry expert named independent living as the “most attractive”, but this should not rule out other facilities.
Let’s now take a look at a few of the top reasons why investors are more serious about senior housing than ever before:
- The opportunity for growth is significant. Right now the senior housing market is valued at $372 billion and we expect to see this number grow. One of the reasons the sector is still growing is because of the involvement of real estate investment trusts (REITs), which have had a huge role in attracting capital providers.
- Attractive demographic trends. As briefly mentioned above, Baby Boomers are moving into nursing homes, and there’s a lot of them. In fact, Baby Boomers are the largest demographic of Americans right now, and they will continue to be in need of care and housing supply.
- Great ROI. When looked at in comparison to other types of real estate property, senior housing has had strong returns on investment (ROI). Thanks in large part to the need-based part of providing care, senior housing is incredibly resilient and will continue to be so.
- New opportunities. Last but not least, there are many great opportunities for new properties in senior housing today. As the properties age, there is an opportunity for investors to swoop in and refurbish or replace existing facilities in order to meet the changing demographics, and new regulations.
To learn more about changes in senior housing and why this is a great time for investors, please contact Shep Roylance of The JCH Group today.