‘Silver tsunami’ fuels senior housing surge

senior housing

The surge in demand for senior housing presents lucrative opportunities for investors in REITs, driven by a "silver tsunami" of ageing individuals and limited housing supply.

The demand for senior housing and accommodation is poised to surge in the next three to four years, offering opportunities for those looking to invest in real estate investment trusts (REIT), according to a boutique property investment firm.

Quay Global Investors principal and portfolio manager Chris Bedingfield believes a convergence of factors, including a “demographic tailwind” and limited housing supply, will create a “perfect storm” for investors.

“We call it a silver tsunami of people coming through who are going to need this type of accommodation, be it assisted or unassisted living,” Bedingfield said.

“With the first of the baby boomers turning 80 in 2025, this generation is about to be responsible for one of the biggest opportunities in property markets.”

He said investing in REITs offered a reliable opportunity as they tend to remain stable and can withstand the impact of external economic factors.

“The good news about this sector is that it’s very economically insensitive. People are getting old no matter what happens to interest rates or no matter what happens to the economy. Every year they’re getting older, so there is strong ongoing demand,” he noted.

“The supply story is equally compelling because this is a sector that got beaten up during COVID.”

He pointed out the growing need for senior housing was one of the highest-conviction ideas in the Quay Global Investors portfolio and pointed to Ventas, a senior housing company in the United States, which is held in the firm’s portfolio, as an example of the opportunity for long-term growth.

“Ventas is the second largest healthcare real estate owner in the United States and senior housing makes up half of its portfolio,” he stated.

“Based on our estimates, we are buying the underlying real estate housing portfolio at a 20 to 30 per cent discount to the cost of build.

“The company’s still going through a post-COVID recovery, so it’s probably going to have the strongest earnings growth profile of most global REITs over the next three to four years.

“Today you are buying it today at around 15 to 16 times earnings, which is not particularly demanding.”


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