Our older population is only partially served by appropriate residential housing. This may be about to change.
It is no secret that Britain’s population is rapidly ageing, with the ONS predicting 15 million people will be over 65 by 2030. There is already latent long-term demand building for retirement housing stock.
However, the UK’s later living market is still tiny compared with more mature markets such as Australia, New Zealand and the US.
In 2017, just 0.6% of over-65s in Britain were living in retirement communities, according to a Local Government Association report.
However, the supply and demand drivers are advantageous enough to suggest that a later-living boom in the UK is a possibility.
As Savills noted in a Key Investment Opportunities article from January this year: “The population aged 75+ stands at 5.4 million and is due to grow by 1.9 million over the next 30 years. There are 726,000 dedicated retirement dwellings in the UK.
“On this basis, we estimate the sector is as much as 45% undersupplied, even before factoring in a high risk of obsolescence of the stock that exists. Legal & General, AXA and Goldman Sachs have already committed to the sector.”
Downsizing and suitable care
A rise in later living might also help solve some of the long-running issues inherent in the UK’s housing market.
Arguably, for too long Britain has ignored the needs of people in later life and failed to provide enough homes for our older generation.
The growing conversation around later living schemes represents a step change in how society is thinking about our elderly population’s living conditions.
However, for many over-65s looking to downsize, there is not a wealth of attractive or available options. A trickle, rather than a torrent, of new purpose-built retirement communities coming on to the market is currently severely restricting the choice on offer.
Over the coming 25 years, demand for later living accommodation is set to grow substantially as the population of over-80s doubles. These strong macro tailwinds mean later living communities offer compelling growth and will generate long-term results.
Retirement communities are a countercyclical, needs-driven asset class and, like other ‘alternative’ investments, offer diversification and long-term cashflows.
Crucially, they are also a socially positive investment that meets a genuine need and have the potential to dramatically improve the lives of the people who live in them.