Back in 2020, Advantage wrote about how demand for retirement communities was growing and the latest data reflects the significance, and growth, of this sector.

A record-breaking year for investment into the UK seniors housing market

According to Knight Frank, new entrants, the growth of rental and strong fundamentals drove record levels of investment into the UK seniors housing market last year.

They add that 2021 was another record-breaking year for investment into the UK seniors housing market with institutional investors spending £1.4 billion in the sector last year. Annual spend was up 2.2% on the £1.3 billion spent in 2020, which was the previous record.

Investors benefited from a ‘far more active market’ in 2021

The number of deals agreed was also up, by 15% year-on-year, which reflects 2021 being a far more active market for investment than in 2020, when total spend was dominated by Lonestar’s £647 million acquisition of McCarthy Stone (accounting for c.40% of total investment). Excluding this deal from the figures means investment was up by more than 50% year-on-year.

The company stated: “We expect more (investment) will follow in 2022. Knight Frank has identified a further £1.6 billion of capital which has been committed to the sector but not yet deployed.”

The importance of housing for older people

In January, a report from the House of Lords’ Built Environment Committee suggested that specialist seniors housing could be one part of the solution to the housing crisis, noting that to date, “little progress has been made on housing for the elderly”.

Analysis of development data shows that the supply of seniors housing is increasing – driven by private sector investment – albeit gradually.

Lack of suitable retirement housing is a barrier to downsizing

Earlier this year, Housing Today reported that retirement housing developer McCarthy Stone, in research produced with Yougov, said an estimated 4.3 million older people would consider moving from their property and around three million said they will need to downsize.

If all these people downsized, this would free up £516bn or £352bn in tied-up equity respectively which “could go towards health-related care costs while also directly releasing a number of properties back onto the housing market to help those further down the property ladder,” McCarthy & Stone said.

The poll found that the lack of suitable accommodation was a barrier to moving with one in three respondents calling for the UK to prioritise the development of more retirement housing.

Advantage’s view: Those with an interest in the property and construction sectors have been suggesting for years that much more consideration should be given to the needs of older buyers and renters. And the House of Lords’ Built Environment Committee’s suggestion that specialist seniors housing could be one part of the solution to the housing crisis shows just how far-reaching the impact of investment in this part of the housing market could be. Following what Knight Frank describes as a record-breaking year for the UK seniors housing market, 2022 looks set to be another busy year for this sector, bringing potential benefits to the property market as a whole.

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