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Huge opportunities in UK senior housing with care

Senior housing in the UK offers huge opportunities to investors but it is important to understand the market as it differs from other European countries, delegates heard at Real Asset Media’s UK Senior Living Report launch, which took place online yesterday.

“The total provision rate of housing with care for the population aged 75+ in the UK is 2.2% which is very low compared to France or Germany,” said Yuri Dobrovolskyi, head of senior living, Bonard. “The private provision rate in the top twenty regions in the UK is just 0.6% and in Greater London it is even lower at 0.2%, even though it will experience the biggest population increase in the UK in the next five years.”

Frédéric Dib, President, Mozaic Asset Management

The UK has one of the largest elderly populations in Europe and life expectancy at birth is 81.5 years, above the EU average. Demographic fundamentals are underpinning demand for senior housing across the board.

“We estimate that five to six times more stock is needed to cover demand, so the growth potential is significant”, said Frédéric Dib, president, Mozaic Asset Management.

But according to the new report by Bonard, the most in-demand segment is housing with care, such as retirement villages, targeted at the ever-growing numbers of elderly people who are self-sufficient but need some support.

“We’re focusing on housing with care but the definition issue is very important, as there are many different descriptions,” said Dib. “Authorities, banks and investors all need clarity, so the new suggestion is the all-encompassing term Integrated Retirement Community.”

In the UK, care homes have a 50% share of the market with 450,000 places, Bonard research shows, while housing with support has 410,000 places. Housing with care comes third with only 80,000 places, less than half of what is available in France and less than a fifth of what the German market offers.

‘Integrated community’ description aiding clarity

“The integrated retirement community term is doing very well because clarity is much needed in a market that is growing strongly,” said Michael Voges, executive director, ARCO.  “The under-provision is very clear and the question of finding alternatives to residential care is very topical.”

The idea is to keep people in their homes for as long as possible. Bonard research shows that investors are waking up to the demand and intensive construction of housing with care establishments is expected across the UK.

“The UK has reacted well to the imbalance and is catching up, performing better than France or Germany,” said Dib.

130 residences are in the pipeline in the top 20 regions in the UK, which will offer a total of 12,700 places. The provision rate is projected to increase from the current 2.2% to 2.3% in 2025, meaning that 12 out of 20 regions will experience an improvement in supply.

“We’re investing in retirement villages in the UK,” said Andrew Ovey, head of healthcare, AXA Investment Managers. “As the market evolves and people have more choice, there will be more provision of spaces that offer amenities and a good quality of life, rather than just meeting people’s care needs. An integrated retirement community goes well beyond the building you live in.”

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