More than 50,000 senior homes required annually to meet demand

More than 50,000 new senior-living housing units are required to be built every year to accommodate the UK’s ageing population, according to Knight Frank’s Seniors Housing Development Update 2023. More than 8,000 senior homes were built in 2022 across 145 schemes, representing a 6.4% increase on the previous year’s delivery. The new homes added last year took the number of completed and operational senior housing units in the UK to 762,872. Knight Frank stated that while delivery of senior homes has picked up in recent years, senior housing only accounts for around 3% of the total number of homes built each year. The delivery of senior housing does not match the rate of growth in demand, as Office for National Statistics forecasts suggest there will be an additional 4.2m seniors by 2040. Based on current supply, this equates to more than 1m additional senior homes being needed by 2040. Tom Scaife, head of seniors housing at Knight Frank, said: “Unfortunately, senior housing delivery currently makes up only a fraction of new supply. There will be an additional 4.2m seniors by 2040, when one in four people will be aged 65 or over. Meanwhile the under-65 population is forecast to remain the same size over this period.” Urban IRCs take the lead Knight Frank’s report found that integrated retirement community schemes are the dominant form of delivery in the UK, accounting for 58% of all new senior homes built in 2022 – up from 49% in 2021, and 40% in 2020. More IRC homes were completed in 2022 than at any point since 2016. Knight Frank has also recorded increasing development activity in urban and semi-urban locations. The report stated that 30% of IRC schemes built in the past two years have been delivered in the most urban settlements, up from just 9% for schemes built before the 1980s. Lisa Attenborough, head of debt advisory at Knight Frank, said: “We have seen significant lender appetite to finance senior housing developments in recent months. A reduction of transaction volumes in other sectors has left many debt funds with dry powder to deploy, and where better to lend than a sector that is so drastically undersupplied? This is driving competitive tension for development debt.” Knight Frank estimates that with current momentum supported by the weight of capital chasing the sector, the next five years will see delivery accelerate further. The firm expects the total number of specialist senior housing units in the UK to grow by 7.5% over the next five years, taking the total size of the sector to just over 820,000 units by 2027. Delivery of age-targeted rental product is expected to increase further in the coming years, for example, with Knight Frank analysis of the pipeline suggesting total private rental units will increase by 91% to just shy of 10,000 by 2027. Scaife added: “Rental is a growing part of the senior housing market, with more investors and operators offering it as a tenure option, either in stand-alone build-to-rent senior housing schemes or pepper-popped within for-sale projects. Growth reflects a need to offer seniors the broadest possible choice of housing options. “Consequently, our analysis of the development pipeline suggests that over the next five years the total number of private age-targeted rental units will have doubled, yet even accounting for such large growth, private rental stock will only account for 1.2% of the total number of specialist senior housing options, making the need for further expansion more important than ever.” To send feedback, e-mail akanksha.soni@eg.co.uk or tweet @AkankshaEG or @EGPropertyNews