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Connell C - LB Mar 2022

Carterwood report assesses retirement living sales velocity

Carterwood, an analyst to the elderly care home and retirement living sectors, has today published research into retirement living sales velocity in Great Britain.

The analysis covers 17,500 unit sales across 350 schemes over a 10-year period and reveals that the average (median) retirement living sales velocity is 2.5 sales a month.

There is wide variation in sales velocity performance – the 75th percentile (higher performing) of schemes sell at a rate of 4.6 units a month, while the 25th percentile (lower performing) of schemes sell at a rate of 1.4 units a month

The strongest determinant of future sales velocity performance is pre-sales performance, defined as sales velocity for the first three months following initial sale – seven-plus sales a month places a scheme in the top 25% of all schemes and provides a solid platform for outperforming the market.

The analysis also identified that size of scheme (number of private units), market tier, provision of on-site care and facilities, and the size of the immediate local market, were all significant factors in determining sales velocity.

Tom Hartley, Carterwood managing director, said: “Along with sales price and construction costs, sales velocity is arguably the single most important factor in determining the rate of return for retirement living developments. Yet, to date, there has been little in the way of empirical evidence.

“Our hope is that this research gives decision-makers helpful context regarding performance across the sector, and that our analysis of individual factors highlights useful areas for consideration when setting commercial strategies.”

Michael Voges, chief executive of integrated retirement community sector body ARCO, added: “In this report Carterwood have once again made an incredibly valuable contribution to the IRC sector and its plans for growth in the coming decade.

“It is clear both that the UK needs far more IRCs in every part of the country to meet demand from older people – and that this needs to be a far greater priority in the planning system.

“Data like this is an indispensable tool for operators and investors looking to understand the opportunity, and for central and local government policymakers looking to expand provision for older people.”

Carterwood’s report acknowledges that a multitude of factors affect sales velocity, many of which were not able to be assessed within the analysis. The company contends, however, that “an important first step towards more informed, data-driven investment and development decision-making”.

To request a copy of the full research report, email ‘Sales velocity’ to: [email protected]

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