At present, the total number of senior housing units in the UK stands at approximately 750,000, distributed across 25,000 schemes. However, a significant proportion of this (82%) is older legacy stock built before 2000. Knight Frank is forecasting the level of stock to grow to 820,000 by 205.
The company said a significant increase in schemes with varying levels of onsite care, as well as rental-only options, is also to be expected.
The increase in delivery is being fuelled by the inflow of new investment and growth in new operating platforms, the firm found.
Already this year, some £450 million of capital has been invested in the sector and Knight Frank has identified an additional £1.3 billion due to be committed. Investment into the seniors housing sector has been strong in the first half of the year, and this is expected to continue for the second half of 2021.
The capital already committed means Knight Frank is forecasting that total investment volumes for 2021 will surpass those seen in 2020.
Annual delivery has already increased from a previous historic average of 6,690 units per year (2011-2015) to 8,293 per year (2016-2020), and Knight Frank is predicting that annual delivery will increase further still – reaching 14,000 units per year by 2025.
“In response to an ageing demographic, the need for age-appropriate housing has grown significantly. Ranging from standard housing through to aged care facilities, the offering of seniors housing in the UK has evolved markedly over the past decade and will continue to do so,” Lauren Harwood, an associate in the Seniors Housing team at Knight Frank, said.
Knight Frank’s examination of the future pipeline points to a shift towards providing more choice for residents, including through mixed-tenure and rental-only options and more schemes with varying facilities and services.
Housing with care schemes account for 57% of the identified pipeline, with almost 18,000 units either under construction or with planning submitted or granted. Currently, there are just over 13,200 retirement housing units in the development pipeline.
The rise in rental products – typically known as senior or retirement living, and currently very niche in the UK – is also growing. The number of private senior living rental properties in the UK is set to increase by 166% in the next five years, from a low base of 5,000 currently to more than 12,000 by 2025.
Growth is set to be driven by a rise in the number of housing with care operators allocating a proportion of their pipeline to the rental market.
Even accounting for such rapid growth, senior housing rental stock will only account for 5% of the total number of private senior housing units, which is currently dominated by ‘for sale’ stock.
However, Knight Frank says the overall sector is still falling well short of demand, despite the positive outlook for delivery.
The current rate of delivery is dwarfed by the UK’s ageing population. For example, over the last five years, 41,464 new seniors housing units have been built, whilst the population of 75-year-olds in the UK has increased by more than 550,000.
“It's clear that a step-change in new delivery is required if this huge imbalance between need and supply is to be reversed,” Harwood added.
A key barrier for increasing the delivery of seniors housing in England remains planning, with the vast majority of councils across England ‘underprepared to provide suitable housing for seniors’.
Last year, Knight Frank’s analysis in partnership with Irwin Mitchell found that more than half of the local authorities in England do not have clear planning policies in place to support housing for seniors.
“Properly incorporating and planning for senior living will reap huge socio-economic benefits for local authorities, developers, residents and the wider community,” Tom Scaife, head of seniors housing at Knight Frank, said.
“Financial savings to local authority care services; release of local family housing back to the market via downsizing; local employment generation; reduced impact on highways and other local services; a post-Covid-19 rejuvenation of high streets; and contribution to housing supply targets are all significant reasons why we need increased delivery. Seniors housing can also help prevent loneliness and isolation in older age, and help facilitate positive mental health and general wellbeing.”
He argued there is a need for authorities, developers and communities to adequately plan for housing across age brackets to meet the needs of their communities.
“Having a proper policy framework, housing targets and separate use class for seniors housing should be a requirement rather than an expectation,” he said.