_UK Retirement Housing Market begins to mature
The clutch of deals seen in 2017 including Inspiring Villages and Renaissance being acquired by L&G, Axa’s acquisition of Retirement Villages and Audley’s move into Clapham in Central London (as well as their latest successful fund raising) have all made headlines in the property sector.
The narrative is changing too.
Everyone now understands the demographic trends that are set to drive growth in the sector, and that there is a cast-iron case for building the homes of the highest possible standard.
We are now seeing a more in-depth approach on delivery: investors looking at different products, tenure mixes, and carrying out a thorough assessment across all sectors of the market. This will inevitably result in a more diversified offering.
Inevitably, as with any industry, there are lessons to be learned on the way – from how to get the right balance of care and lifestyle in a scheme to how to respond to the micro-markets of within specific localities.
Knight Frank’s Retirement Housing team, along with our colleagues in Healthcare, Residential Capital Markets and Research, are drilling down into data in even more detail in order to present the most complete picture of tenure trends and retirement housing fundamentals. This way, we can share the latest insight into retirement hiving, care homes and later living rental markets to clients.
We are also working within the wider industry to help define the language of the retirement housing sector, and to promote understanding of this type of housing more widely.
We wait with hope that some of the policy issues which still hold back progress in the sector will be resolved – these include lack of clarity around planning and uncertain Section 106 requirements.
What is absolutely clear, however, is that the sector is now firmly out of the blocks, and has the potential to respond to increasingly eager investors and consumers.
Retirement housing allows investors to access returns from the operational care and leisure business as well as development. As the market matures, investors are taking longer term views on returns, and they are making larger investments in the operational businesses in the sector. With investors waiting longer periods for return on capital, it should lead to an increase in the variety of different tenure options available to residents which will in turn make the sector more accessible to a wider range of residents.
Read Knight Frank's latest UK Retirement Housing Market Update here.
Tom Scaife
Partner, Knight Frank Retirement Housing
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