New names enter senior living in £3bn investment surge

Developers and investors are gearing for retirement living following a £3bn surge of investment into the sector. Some £1.8bn was committed to senior living and healthcare in the first quarter. The pace of investment has maintained, with a further £1.2bn in deals struck over the last eight weeks. New entrants to the sector include John Whittaker’s Peel L&P which is preparing to expand retirement housing at its largest regenerations. Peel is exploring setting up a new platform to develop and fund retirement and extra-care housing. James Whittaker, development director at Peel L&P, said a specialist business could support this growth, comparing it to how Peel runs its logistics business. He said: “We put together a platform where we feel there’s growth in a sector and bring a specialism to the fore, bring the funding together, create the platform and then deliver a new business and opportunity.” Whittaker added that the company’s strategic sites such as Liverpool Waters were ideally suited to these schemes: “They’re connected into city centres, to amenity spaces and leisure attractions and activities.” Peel L&P is also looking to add retirement and extra-care alongside the thousands of BTR, student and co-living beds at MediaCity. Maturing market Peel’s plans follow a surge of investment into later living in 2021, peaking this week with a £500m joint venture from BlackRock and Audley and a £300m investment from Fore Partnership. Fore has teamed up with extra-care operator Amicala to develop 1,000 homes. It has appointed First Base to develop an £80m scheme in Bristol and has expansion planned in cities including Brighton, Birmingham, Cambridge and around the M25. Basil Demeroutis, managing partner at Fore Partnership, said Covid-19 had highlighted the need for investment into the sector. “There’s a personal dynamic to it,” he said. He added that the asset class also makes business sense, as other parts of the market such as logistics have become more crowded. “Things like student housing, later living, these alternative sectors have won favour.” Demeroutis said Fore Partnership has a twofold strategy, targeting offices and living residential investment. “There will be three legs of the living strand – co-living, assisted living and affordable housing,” he said. Fore has been bidding on projects for that last leg, with schemes in temporary accommodation and affordable provision. “That’s the next area we are going to tackle,” added Demeroutis. The commitment follows some £1.8bn in senior and healthcare tracked by JLL in the first quarter of 2021. There has since been a further £1.2bn of deals, including those from Galliard Homes, Schroders and a £200m deal from Macquarie and John Laing. Knight Frank’s head of senior housing, Tom Scaife, said that although there is significantly more investment to come, the sector is still the smallest part of the residential market. However, it is an upwards trajectory. Last year, Knight Frank tracked £1.3bn in deals and is set to exceed that this year. The agency has forecast 10% growth for the sector over the next five years, bringing the total number of homes to more than 800,000. This will be led by 48% growth in housing with care and 5% growth in retirement housing. “The market has moved from operators that have built and opened first-generation kit and proven the model, and now they are moving into second-generation kit, optimising the built form and the service model,” said Scaife. “All of that points to a maturing of the sector. The model has been proven, first institutional movers have gone in and the BlackRocks and Schroders are now investing.”   To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews To send feedback, e-mail julia.cahill@eg.co.uk or tweet @EGJuliaC or @EGPropertyNews   Photo © David Dixon