Seniors housing, the next big investment?

While the national vacancy rate for standard senior units remained roughly the same as last year, 10.6%, regional rates in Ottawa and the GTA saw precipitous drops. They led Ontario to its own vacancy rate decline, that figure dropping to 13.8 per cent from the 15 per cent logged a year earlier.

Still, investors may be more focused on Western Canada and its tighter housing markets for seniors.

Manitoba has the country’s lowest vacancy rates for standard spaces at just 4.8%, with Saskatchewan also among the provinces with the lowest average rates. Nova Scotia and Quebec also represent real opportunity for real estate investors looking to build small-to-medium seniors residences, with our without assisted care.

Still, even with its relatively high vacancy rate, Ontario is likely to draw much of the investor interes.

"A moderation of growth in new supply also helped bring down the vacancy rate,” said Penny Wu, CMHC's senior market analyst. "New seniors' housing continues to attract new residents in Ontario. More seniors, especially couples, opted for the newer and larger spaces with a higher level of amenities."

Total seniors' housing supply grew at a slower rate of 3.5 per cent in 2012 to 51,300 spaces. According to the report, the average monthly rent for bachelor units and private rooms, where at least one meal is included in the rent, was $1,966 in 2012, up from $1,903 in 2011.

That doesn’t necessarily guarantee healthy returns, but American investors are cash flowing just enough to compensate for the high capital costs.

A recent report from the National Investment Center for the Seniors Housing & Care in the USA shows that more than one fifth of respondents, at 22.9%, currently have investments in seniors housing. The survey shows 13.3% of investors plan to invest in the sector in 2012, up from 8.3% in 2011.

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