Knight Frank’s NextGen Living 2025 report reveals that, by 2029, almost a one in four investors plan to double their current exposure to the UK living sectors.
Knight Frank’s survey of 56 leading institutional investors who currently manage more than £60bn in living sector assets in the UK found that the proportion planning to invest specifically in seniors housing rental is expected to nearly double by 2029, rising from 21% currently to 39% within five years.
As a result, Knight Frank forecasts that the total number of seniors rental properties will surge from 4,100 to more than 10,000 by 2029, representing a growth of 150%. Despite this relative growth, senior housing rental stock will only account for 1.2% of the total number of specialist senior housing options, highlighting the potential for further scale
Matthew Bowen, head of global living sectors research, said: “The projected growth in rental stock is a strong start, however it is still just scratching the surface of demand. Today, half a million seniors rent in the residential sector, many in homes that no longer meet their needs as they age.
“Drawing parallels with the mature North American market, where more than 90% of seniors housing stock is rental, our research shows that the UK is starting to exhibit similar characteristics, from customer profiles, void rates, and growth trajectories.”
According to Knight Frank, the current market value of the Living Sectors has reached £212bn, with the seniors housing market alone valued at £44bn. Investment volumes across the broader living sectors, including purpose built student accommodation, Build-to-Rent, and seniors housing, exceeded £10bn in 2024.
Survey respondents indicated plans to invest an additional £45bn over the next five years across these sectors, with seniors housing emerging as a key growth area.
Tom Scaife, head of seniors housing at Knight Frank, commented: “The senior’s housing sector has demonstrated remarkable resilience and maturity over the past decade. Investors have learned so much in recent years about what good looks like – whether that be around management, or cost and design efficiencies. The conversation has moved beyond identifying the customer to understanding what drives their choices: health needs, affordability, financial sustainability, compassionate staff and diverse activities are all important, along with clear and transparent costing.”
Knight Frank’s survey reveals that environmental and social considerations are increasingly shaping investment strategies, with 80% of respondents citing investor pressure as a key driver for ESG investment. EV charging infrastructure leads new project requirements, targeted by 66% of investors, while sustainable energy solutions such as heat pumps and solar power generation are prioritised by over half of investors.
The sector enters 2025 with improving market conditions. Construction cost inflation has moderated significantly to 2.9% in 2024, down from its peak of 15.5% in 2022, with further stability expected as interest rates continue to decrease. The investment landscape has evolved, with joint ventures becoming the preferred route to market, replacing traditional stabilised asset purchases.
Scaife continued: “The first seniors BTR schemes to open have provided valuable expense and revenue data, supporting underwriting efforts. Capital is now being raised for additional business plans, which will serve as a catalyst for further investment. The key to platform expansion will be high-quality partnerships between operators and developers, each leveraging their respective strengths.
“Looking ahead, we anticipate an increase in North American investors with larger ownerships and established track records in the sector. As this happens, we expect the language around products to evolve. Terms like Active Adult, Independent Living, and Assisted Living will better reflect the diverse customer profiles, amenities, and service offerings.”
Read the orginal article: https://propertyindustryeye.com/uk-living-sectors-poised-for-significant-growth/
