The supply of private housing for older people is set to rise by 30% in the next five years, with growth concentrated in the South East, South West, Midlands and East of England.
Analysing plans of all major operators against past delivery, Knight Frank forecasts an additional 50,000 private sales and rental units by 2024.
Its Senior Living Annual Performance Review – 2019 found there are around 740,000 senior living units across the UK and almost a quarter of these are private – 175,000. On the rental side, there are more than 4,000 existing senior living private units.
Knight Frank estimates the value of the private rental market will increase from £1.3bn in 2019 to £3.4bn by 2023. This will be driven by greater commitments from private equity and institutional capital looking to diversify their real estate assets.
The report said the senior housing market was being ‘fuelled’ by international capital from North America.
It predicts increased diversification of residential plans and more partnerships between builders and operators, with a focus on the role senior living can play in creating intergenerational communities.
It said: ‘There will be an increased number of joint ventures and management agreements between care companies and developers. More operators will also the enter the market.’
Using a sample of 200 schemes developed since 2000 as part of its research, the global property consultancy said in London the number of available private units priced at more than £1,000 per sqft will rise from 300 to 2,000 by the end 2023.
Tom Scaife, head of senior living at Knight Frank, said: ‘The rental market for senior living is very likely to increase in line with the changing tenure trends across the UK’s wider housing market. As well as increased interest in purpose-built rental, for-sale operators are also increasing their allocation of private rented units pepper potted in their schemes.’
However, Scaife did outline challenges, such as applying sophisticated technology to the market and solving the ‘staffing conundrum’. He said: ‘More advanced training programmes will be required to improve staff retention rates and manage staffing costs.’
Phil Bayliss, chief executive officer of Later Living at Legal & General, said the increase in rental property for this demographic was promising as it is becoming more important to offer choice and flexibility in all areas of the housing market.
He said: ‘Whilst all good news, as a country, we still need to do more. Where we live drives material health outcomes and can significantly improve the way we age. Clear long-term policy from government, which can level the playing field between retirement operators and traditional house builders, will be vital to continuing to attract investment.’