An ageing population and accompanying social and economic shifts across Western Europe are driving demand for high-quality senior living options.
Specialist real estate investor Octopus Real Estate oversees a portfolio of 24 retirement villages and is actively pursuing new projects to address the increasing demand for senior living accommodations in the UK.
The company’s portfolio, valued at approximately £3.6 bn (€4.3 bn), comprises both debt and equity investments. ‘We primarily focus on living sectors and healthcare, with the Octopus Healthcare Fund being our largest fund. Valued at over £1.5 bn (€1.8 bn), this fund owns more than 100 modern care homes across the UK,’ Kevin Beirne, head of Retirement at Octopus Real Estate, told PropertyEU.
Beyond healthcare, Octopus Real Estate specialises in retirement living. ‘This involves developing and managing retirement villages and communities, offering independent living options for older individuals. We manage three funds dedicated to retirement living: two institutional funds and a retail platform where we have created our own developer/operator, called Rangeford.’
‘Retirement communities as an asset class is typically made up of high-quality real estate investments due to the preferences of older customers, especially baby boomers. These customers often have significant financial resources and are willing to downsize their homes in favour of higher-quality living spaces’, Beirne added.
Retirement villages, in particular, offer a variety of amenities to cater to the lifestyle needs of older individuals, such as restaurants, spas, fitness centres, and other wellness facilities.
Earlier this year, Octopus Real Estate expanded its real estate business into Europe, opening an office in Madrid. ‘Spain offers a stable and robust real estate investment market, with strong demand for senior living properties and a growing aging population. It also boasts well-developed real estate infrastructure and has experienced lower inflation and construction costs compared to Northern Europe. Finally, recent investments in senior living projects in Spain have demonstrated the market's potential for this type of development,’ explained Beirne.
Octopus Real Estate is keen to expand its operations across Europe, with Germany emerging as a particularly promising market due to its strong demand for rental living properties and favourable demographics. ‘We also see potential in the Benelux countries, the Nordics, and France, although each market has its own distinct characteristics and opportunities,’ added Beirne.
The company finances its value-added strategies through a combination of equity and debt. Equity is raised from institutional investors through specific investment strategies, while debt financing is typically leveraged between 40% and 60% and is obtained from local debt providers.
Octopus Real Estate recently completed a significant acquisition of a high-end retirement living site in Henley-on-Thames, UK, in partnership with Elysian.
‘In the coming months, we will be focusing on completing several development and acquisition projects that we have been working on over the past 18 months. We are also planning a major new retirement community investment in the south of the UK for our Rangeford platform. Looking ahead to next year, we hope to announce additional acquisitions and developments in several European jurisdictions, including Spain,’ revealed Beirne.
In the long term, senior living will become a highly sought-after income stream for equity and pension funds. This is due to the stable and predictable cash flow generated by senior living rental properties, which is often index-linked and has low turnover, concluded Beirne.
