Nearly half of all investors polled by a recent survey believe now is the time to invest in senior housing communities, and that property values are due to rise this year.
Forty-eight percent of investors who responded to the survey from Wealth Management Real Estate and Marcus & Millichap said that now is “the time to buy senior housing,” beating out the level of interest in other property types such as self-storage, industrial and apartments. Another 43% said now is the time to hold, and 9% said now is the time to sell when it comes to senior housing properties.
Among respondents who already invest in the senior housing industry, nearly three-quarters (70%) said now is the time to buy, with 26% saying it is time to hold and 4% saying it is time to sell.
Slightly more than three out of four respondents (76%) believe senior housing community values will increase in a year from now while 20% said values in senior living will remain the same and 4% said they will decrease. On average, respondents said they anticipate senior housing property values to increase by 9% in the coming year.
The survey, focused on the first half of 2022, included 544 survey responses collected between February 16 and 24.
The report is yet another indication that investor interest in senior housing is swelling as the industry continues to recover from the pandemic. Indeed, senior housing was among the five most-popular property types, with 19% investors indicating they are “likely moving into” the space with repositioning commercial assets. Apartments (38%), industrial (30%), mixed-use (26%) and self-storage (22%) make up the other leading categories of potential investment for repositionings.
A total of 42% of respondents said they expect no change in senior housing property cap rates while 33% said cap rates could get “somewhat better” and 25% said cap rates within senior housing property holdings could get “somewhat worse” in the coming year.
Half of the investors who responded to the survey said they believe economic and employment conditions will have a positive impact on occupancy rates in the coming year. Another 38% believe there will be no change, and 12% believe occupancy rates will be “somewhat” or “significantly” worse as a result of economic and employment conditions.
Additionally, nearly half of all respondents said they did not think that the worst of the economic downturn is already behind us, with just 30% agreeing or slightly agreeing to that statement. Investors’ top concerns for the coming year included rising interest rates (65%), inflation, (65%), rising operating expenses (49%) and changes to taxes (47%).
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