Sunday, August 16, 2009

Salutory tale for retirement village builders

This is a sad story.

In 2007 a Victorian, former workhouse and hospital in, Essex UK, was converted into a retirement village. Then came the credit crunch; purchasers vanished, except for one poor soul who paid has money and moved in.

Two years latter the 86 year-old remains the sole inhabitant. After spending £6 million on the development the owners went belly-up.

The chief executive of the English Community Care Association, said that it was expecting to see many more retirement and care homes suffer the same trouble. “It is only now that people are starting to see the impact the credit crunch is having on their income,” he said. “People are in a much more precarious financial position than they were in before. Their property is not as valuable and those whose income is based on share incomes have seen an enormous drop. “People are reluctant to make any financial decisions at the moment — and that includes making decisions about care.”

A lot of developers believed that retirement properties were a no risk investment. For a decade, property investments had been a one way bet. What could go wrong? Ask the poor guy in Essex.

However, it is not all doom and gloom. It all comes down to supply and demand. Near to where I live there is only one decent retirement property complex and its properties have not suffered any price erosion. Dick Stroud

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