What is economic empowerment?
Economic empowerment can be a great thing. This can be seen through young adults exploring their financial independence in return for their Saturdays. Or through today’s women having better control of their own finances than ever before. As technology advances and new innovations come into play, we see more groups of our population seize financial independence and rely less on welfare and others to get the support they need. The world is an exciting place but with this rapid change, there is a risk that some in our society are being left behind, especially in terms of property.
Along with medical innovation and the increased popularity of a healthy lifestyle, as a species, we are starting to live longer. Consequently, the working age population is required to offer financial support to an ever-increasing number of citizens. According to the 2017 US Census, 14.9% of all US citizens are now over the age of 65, and this is expected to continue rising. It is also estimated that by the year 2030, one in five American citizens will be over 65, and 28 million will be over the age of 80 by 2040. In response, we have seen several Western governments including the UK, France and Sweden increasing the pension age as a measure to ensure that there is still a place for our ageing workforce. Some governments even offer incentives for employers to employ older workers, providing tax breaks for recruiting older employees for over than six months.
Is the senior’s market investable?
Martin Mbeteni points out that as a result of global financial change, our elderly citizens are being forced to work well past their anticipated retirements ages. As they did not grow up with technology like millennials and lack the corporate ladder determination of baby-boomers, it appears that is little demand for workers in this older demographic. Furthermore, women in this age bracket are less likely to have crucial past work experience due to childcare, and consequently will have accrued a lower pension amount over their lifetimes than men.
To compound this issue of underemployment, older citizens also find themselves living in overpriced and unacceptable accommodation. Martin Mbeteni, as an experienced real-estate banker, warns that the property market is one key area that leaves our elderly at their most disadvantaged. There is a profound lack of affordable, elderly-friendly accommodation; a fact that hits lower income and non-white citizens the hardest. The seniors housing industry experiences widespread underinvestment. Despite this, seniors housing appreciation returns were higher than all major property investments on a 10-year basis.
The role of commercial real estate bankers like Mbeteni is to help owners and operators of seniors housing to secure capital. Typically, this is from domestic and international lenders and investors, and goes toward the development or acquisition of seniors housing properties across the country.
One explanation for this notable shortfall in viable senior property is not the growing population size, but that we are simply failing to keep up with demand. Annualized completion was only at 22,000 units last year, despite the senior’s market repeatedly topping lists for its development and investment prospects in 2018. Only by helping to secure more investment for the seniors housing market will we start to see safer, more affordable property becoming available for our elderly citizens, ensuring a better quality of life, and ultimately an increase in their own financial independence.
Martin Mbeteni is the Vice President of Capital Markets seniors housing for JLL. He has over 10 years of experience in helping owners and operators of seniors housing secure capital (debt or equity) from domestic and international lenders and investors for development or acquisition of seniors housing properties across the country.