Aging baby boomers and restrained construction of new facilities will drive demand
New York, NY (PRWEB) February 10, 2014
The Retirement Communities industry is forecast to exhibit accelerated growth in the next two decades. According to IBISWorld Industry Analyst Dmitry Diment, “An aging population and growing need for dementia care (care provided to those with memory impairment) are stimulating much of the industry's growth.” Retirement communities provide a number of services to assist seniors who suffer from chronic illnesses or with activities of daily living. In the past five years, the number of assisted living facilities that provide dementia care has risen as a proportion of total facilities. While the industry has exhibited resistance to the recession, a poor housing market hampers individuals' ability to move into a community because many seniors finance the expenses of retirement communities through selling their houses. As a result, the housing market's downturn over the five years to 2014 has partially offset industry revenue growth. During this period, IBISWorld estimates that industry revenue will grow at an annualized rate of 3.7% per year to $60.2 billion, including a projected 4.6% jump in 2014.
Profit has been pressured slightly since 2008, mainly due to the costs associated with regulation compliance, although most companies have managed to maintain profitability through higher rent and entrance fees. In addition, industry profit margins have benefited from slow growth in new senior housing starts early in the five-year period, which increased occupancy levels across existing facilities. As a result, higher occupancy rates were able to buoy the industry's profit margins, offsetting the declines in demand from those affected by the recession.
In the five years to 2019, an improving economic environment, an aging population, healthcare reform legislation and new services will facilitate industry revenue growth. As the housing market improves, more seniors will be able to sell their homes and pay resident fees. “However, despite increased financing for the construction market, risk associated with bank-line renewal and the lower liquidity that many operators are experiencing will likely cause them to depend on real estate investment trusts to supply new industry facilities,” says Diment. Over the five years to 2019, the number of industry establishments is projected to rise to meet the demands of an aging population.
The Retirement Communities industry is highly fragmented. Consolidation slowed during the recessionary years of 2008 and 2009, when lending was difficult to secure from banks. However, banks and private equity entities are beginning to view retirement homes and assisted living as a desirable sector again, and the major real estate investment trusts in senior housing are well positioned to invest again. However, many of the acquisitions made during the coming years will likely be distressed properties, and high-end properties are unlikely to be sold.
For more information, visit IBISWorld’s Retirement Communities in the US industry report page.
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IBISWorld industry Report Key Topics
The Retirement Communities industry provides residential and personal care services for the elderly and other individuals who are unable to fully care for themselves or who desire to live in a community facility. The industry excludes companies that predominantly provide inpatient nursing, skilled nursing or rehabilitative services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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