Housing sector

Senior housing sector continues to recover: CBRE

The greatest investment opportunity. Graphic courtesy of CBRE

A CBRE A survey has found that the senior housing sector is expected to experience an increase in rental rates and residences in 2022. The same survey established that senior housing residence could return to pre-COVID levels in the 18 months.

The majority of investors (82%) believe that pre-pandemic levels will be reached within 18 months, with the fastest absorption occurring in the adult and independent active living areas of the sector. In the assisted living and memory care areas of the industry, the reabsorption period will stretch to 24 months, according to most (89%) investors.

Within active adult, independent living and memory care assets, rental rate increases of 1-7% in 2022 are expected by more than 70% of investors. Some 42% foresee increases of between 3 and 7%.

In the Skilled Nursing and Retirement Support Community Living sub-sectors, 68% expect rental rate growth of 1-3% in 2022.

The greatest opportunity

“Cap rates have compressed to pre-pandemic levels and, after taking into account ongoing market dynamics, our internal view is that cap rates should remain mostly flat for the foreseeable future, James Graber , head of senior housing and healthcare for CBRE. Assessment and Counseling Services, says Multi-Accommodation News.

The average cap rate for seniors housing in 2021 fell 13 basis points year over year. This rate is currently below the pre-pandemic average for the first half of 2020. Nearly 50% of respondents expect cap rates to remain unchanged this year, despite rising interest rates and the ‘inflation.

The greatest investment opportunity in the senior housing sector will be among working adults, say 34%. The biggest challenges for the sector will be seen in the areas of staff availability and cost, followed by inflation and interest rates. Earlier this week, a JLL survey revealed optimism about the retirement home sector.