Retirement Homes: A high-yield investment in real estate

In the life of a working professional, there comes a point when they must retire from their office duties. About two-and-a-half decades ago, nearing retirement, these individuals would often think about securing their own home. However, things changed at the turn of this century. Affordable home loan options became available, allowing people in their 30s and 40s not only to dream of owning a home but to actually achieve it. As time progressed, real estate began to be seen as a viable investment option.

Investors started exploring tier-two and tier-three cities, along with tourist, educational, and religious destinations. During this time, the concept of investing in ‘retirement homes’ emerged. But what exactly is a retirement home, and what are its features and investment potential? Let’s find out:

What is a Retirement Home?

In recent times, the term ‘senior living community’ is often used for retirement homes. “Simply put, retirement homes are housing projects consisting of several hundred homes designed and developed specifically for senior citizens. These projects are similar to regular apartment or residential projects but with a focus on the needs of the elderly. Common areas feature ramps instead of stairs, ample lighting, and communal seating areas for gatherings. In addition, special care is taken to provide nursing and medical facilities. Such homes typically have an age requirement for residency,” informs Pradeep Mishra, CMD, ORAM Developments.

For instance, in some retirement homes, you can invest at the age of 40 or 50, but you can only use the property once you reach 60 or older. Now, you might wonder, will the property remain vacant during that time? The answer is no. Developers of these properties usually rent them out to others in the same age group, allowing you to earn a monthly income like any other property. When you reach retirement age, you can choose to use the property as you wish.

India Will Become an Elderly Nation in the Coming Years

Prime Minister Narendra Modi often refers to India as a young nation in his speeches. While it’s true that a large portion of the population is currently young or adult, today’s youth and adults will eventually age. In modern Indian society, elderly care has already become an important issue, and retirement homes are emerging as an attractive solution. The weakening of the joint family system and the rise of nuclear families have increased the need for safe and comfortable living options for the elderly.

“This demand for retirement homes is continuously growing, making it a lucrative investment opportunity. Moreover, investing in a retirement home offers not just financial benefits but also social and moral satisfaction. By ensuring the care and safety of senior citizens, investors make a significant social contribution, earning respect in the community and experiencing mental peace,” says Mishra.

A Source of Stable Income

As mentioned earlier, you can rent out a retirement home to earn a monthly income like any other property. Yes, the company or organization providing services at the retirement home does charge a fixed fee. Similarly, the agency or organization also charges residents for services like food, healthcare, and transportation, creating a win-win situation for investors, residents, and the service provider. If you plan to invest in such a property, understand that it’s not just about current income but also about future capital growth.

“I often say that the realty sector should be viewed as a long-term investment, and given the current trends, the demand for such properties and projects is expected to increase in the future. One reason is that the fast-paced metropolitan lifestyle leaves the younger generation with little time for their elderly and experienced relatives. In such an environment, living in these communities with peers of the same age allows the elderly to spend their time well,” says Mishra.

Tax Benefits

Investing in a retirement home can offer various tax benefits to investors. The government provides several tax exemptions and other incentives to encourage elderly care. Through these, investors in such properties can enjoy tax savings.

Investing in a retirement home can be a profitable and stable source of income. With growing demand, stable income, long-term capital growth, social and moral satisfaction, and tax benefits, it stands out as an attractive investment option. If you’re looking for a safe and profitable investment, investing in a retirement home could be an excellent choice for you.