The SectorScope examines the growing interest in developments for the UK's ageing population and highlights opportunities for the construction and property sectors.
The UK’s specialist residential sectors – accommodation designed and constructed for a specific occupant segment - are growing fast.
Two of the main examples of specialist residential are purpose-built student accommodation (a name that speaks for itself) and build-to-rent, homes designed to optimise the opportunities in the UK’s growing private rental market by appealing to a new generation of renters.
Both PBSA and BtR are characterised by a level of quality both in build, interior design and facilities that has previously been lacking in those sectors. By offering an elevated experience, developers attract higher-than-average returns on their investment. And there is no doubt that the strategy seems to be working, since the UK’s PBSA and BtR sectors are drawing in billions of pounds from investors.
In the UK, another consumer segment is on the rise: seniors. The over-60s are a growing market, but as our report shows, it’s a sector that is poorly-served for targeted, quality residential options. The gap is quickly being recognised by the private sector, and this is creating opportunities for the construction sector and specialist suppliers.
Getting older for longer
The Office for National Statistics (ONS) latest figures show that the UK average life expectancy projected to 2045 is 82 for men and 85 for women. We are living longer, and the proportion of older people in our society is growing.
The Centre for Ageing Better says that almost 40% of people in England are currently over 50 and almost 20% are over 65.
By 2039, the ONS says the number of people aged 75 and over will double from 5 million to 10 million. And over the next 15 years (to 2037), the UK population aged 85 years and over is projected to increase from 1.6 million to 2.6 million.
What does this mean for the residential market?
Home ownership in the UK is skewed towards older generations. For example, 23.5% of the 55 to 64 age group own their home outright (i.e. with no mortgage). This figure rises to 61.3% for the over-65s.
However, it’s important to note that not all older people enjoy a wealthy retirement. The Centre for Ageing Better recently reported that 18% of pensioners are living in relative poverty. And people aged 60 to 64 experience the highest poverty rates of any adults, with 25% facing financial hardship.
So, the senior residential market as it stands is far from homogenous. While older people are a considerable proportion of homeowners, many seniors are living in private rented accommodation. In fact, the number of people over 50 who rent privately has doubled to two million in the past 20 years.
This is a segment that requires a range of housing solutions that provides choices in terms of costs, but also in levels of care provided. The challenge for developers and services providers in this market is that people’s requirements continue to change over the decades, and residences must reflect these evolving expectations.
A gap in planning – an opportunity for growth
Despite the UK’s ageing population, there is currently a surprising lack of government planning for senior housing. A report from PCB Today magazine, highlights that of England’s 317 Local Planning Authorities (LPAs), 100 have no policy or site allocations for housing for the elderly in their areas.
Furthermore, 100 LPAs have policies in place which highlight the need for this type of housing, but no guidance or strategy for how they will meet that target. And 47 have sites allocated for construction, but no policy to deliver a finished project.
As Savills asked in 2021: “Senior living and planning reform: time for fewer words and more action?” The answer would seem to be a clear ‘Yes.’
This leaves a significant gap in the senior housing market that must be addressed with some urgency in the next few years. It was an issue that was hardly raised by the major parties during the recent general election, so it seems unlikely that the new government is set to grasp the problem quickly.
Creating desirable senior homes – a positive impact for all
With demand rising, both public and private sector solutions must be found. In particular, the private sector is well positioned to help older homeowners move to more manageable properties as they age.
The Local Government Authority report, Housing our ageing population (2022) noted that this is an important step for the whole housing market. The report states: “Building more age-friendly homes, and promoting rightsizing opportunities to older people, will help to free up larger homes for families in need of space. Three million people over 65 want to move to a smaller property but are put off by the lack of choice.”
In addition, a 2019 government report (Housing for older and disabled people) highlighted that good housing provision for the senior sector helps people live independently for longer, reducing the burden on the NHS. Good quality homes for this market can also reduce loneliness and enhance a sense of community – both increasingly recognised as vital for a long and healthy life.
Senior living examples across the world
Several countries are more advanced in their approach to senior living facilities. For example, less than 1% of British over-65s live in retirement villages, compared to over 6% in the USA and 5% in Australia.
One of the reasons for the higher take-up is that the retirement village market is more mature in these other countries, with facilities that meet a range of needs and preferences. For example, some are available in or close to most major towns – making them a familiar part of their communities. Alternatively, there are standalone retirement villages which offer a significant range of facilities and opportunities to engage in activities.
A retirement village is a popular option for older people, since they can provide a sense of community, often with varying levels of care available on-site which can be accessed as needed. For example, some residents may only require a cleaner, others a more involved level of care.
Buildings around these villages are designed to accommodate older residents, for example ensuring that areas are easily accessible for all abilities.
In the US, this market is very well-established and is set to grow from 6.1% of over 65s to more than 12% by 2030. One notable point there is that seniors are not looking for ‘old people’s homes,’ but a more ‘resort’ type experience with facilities and activities easily available.
A good example is The Villages in Florida, the largest in the USA which is home to 80,000 residents aged over 55. Facilities include a golf course, retail centres, running trains and restaurants. The Villages is a standalone facility, effectively creating its own large town.
An alternative approach can be seen in Australia’s largest senior residence, the Nellie Melba Retirement Village, operated by Ryman Healthcare. The village is home to around 700 residents, but rather than being outside of a town, it’s in the centre of the Wheelers Hill suburb in the state of Victoria. Its proximity to local amenities such as a shopping centre, restaurants and parks makes it part of the local community.
The UK senior residence market
Although the UK market is less mature than other geographical regions, there are well-established players in the market. JLL identifies some of the largest in its 2024 Senior Living report
The five largest are:
Company | Total number schemes | Units |
McCarthy Stone | 1,423 | 64,222 |
Churchill Retirement Living | 210 | 8,741 |
Pegasus (Lifestory) | 108 | 4,186 |
Audley Villages | 20 | 2,314 |
Bovis Homes Retirement Living | 47 | 1,988 |
The sector has recently seen further growth. For example, Churchill Living recently purchased seven sites across the UK where it will build schemes with a total development value of £125 million.
Buy or rent?
Most developers in the UK currently lean towards selling properties in their developments, although there are options to rent. However, there is a growing interest in the sector in a build-to-rent approach.
Currently, there are very few operators focused on this model. Birchgrove is one of the main providers in this niche which is already making waves. It recently won the Property Week Later Living Operator of the Year 2024.
The apartment-based approach offers residents the benefit of not requiring the large capital sum, stamp duty or legal fees associated with buying a property. Birchgrove provides high-quality apartment living with a monthly rent that includes utilities, broadband, phone calls and cleaning. In 2024, Birchgrove announced that it would be working with letting agent Hamptons to provide its offer to a market “seeking quality senior rental living”.
Designing and delivering senior residences
There are obvious factors to consider when designing homes for the senior living market. Basics include ease of access, reduced steps and stairs and ensuring doorways are wide enough for wheelchair access.
However, there are other elements of design that can enhance occupant wellbeing. This article by Urbanist Architecture highlights the impact of light, materials and building layout on mental health as we age.
Use of technology is another element that is growing in importance for this market. Bluetooth-enabled and voice activated devices can help to streamline daily living. For example, being able to turn on lights around the home from a single point, providing greater security and less likelihood of a stumble in the dark.
In addition, growing number of medical devices can now be monitored remotely, collecting information from simple health indicators such as heart rate or blood glucose monitors. Reminders to take daily medications can also be programmed, supporting resident wellbeing.
A 2023 academic study investigated the use of smart home technology for managing chronic conditions in the elderly and noted: “Smart homes show great potential in the management of chronic diseases… The use of smart homes in the community could bring numerous benefits in terms of continuity of care, allowing the constant monitoring of older people by local and hospital health services.”
A sector to watch
Property specialist JLL launched its inaugural report on the UK Senior Housing market in 2024. It concluded that: “The sector offers exciting opportunities for operators and investors to develop much needed seniors housing which is fit for the future and secures widespread ESG benefits.”
JLL predicts robust growth, pointing to 806 senior housing schemes with planning or in the planning process that will be on site between 2025 and 2029. It also predicts growth in the private rental market for the senior sector, pointing to a handful of developers who are offering more homes for rent to the senior market.
This is a growing market that offers tremendous potential for the construction sector. It’s also one that, given the UK’s ageing population, should see strong drivers from both national and local governments. Growth should therefore be driven by clients in both the public and private sectors.
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