Each year the seniors housing team at Knight Frank predict trends, track growth and provide key KPI’s across development, investment and operations within the seniors housing market. The annual review was presented last week by Tom Scaife and Lauren Harwood who shared their third annual Seniors Housing Operator Survey which is also their biggest to date. The analysis of data provided by senior housing operators gives a unique and detailed insight into operations, performance and resident profile.
Last year the team predicted a record year for institutional investment and this year is no different. More than £800 million was spent in the first nine months of the year which represented an increase of 73% on comparable 2020 levels. Knight Frank forecast another record high for the second successive year, with £820 million already being spent and a further £1.85 billion committed for the rest of the year.
Tom Scaife opened proceedings, commenting that in 2021 it really feels like there is an alignment of forces that have come together to support the expansion of the sector. This has been seen through the increase in investment into operational real estate, the expansion of the rental market and operators becoming more experienced and investing in areas such as sales and marketing, staff training and retention and optimising the design of their schemes.
The panel discussion was chaired by Michael Voges, executive director of ARCO, with Nick Sanderson of Audley Group, Honor Barratt of Birchgrove, Sonia Parol of Inspired Villages, Will Bax of Retirement Villages Group (RVG) and Jason Leek of Riverstone.
It was very encouraging to hear from Nick Sanderson that there has been a significant increase in demand for Audley Villages around the country after the benefits of retirement communities were highlighted throughout the pandemic. Will Bax of RVG, also noted a doubling of interest from prospective buyers from April 2020 to April 2021 and talking to prospective customers, it was COVID-19 that was the catalyst for their enquiry. Will also commented that infection rates across the sector were ‘extraordinarily’ low. At RVG there were only 8 infections out of 2,000 customers. With fellow operators also noting the same trends, it is appearing that the pandemic has been a major advance at a critical time for the sector.
Another key trend discussed by the panel is the shift of communities from rural to urban locations. Jason Leek of Riverstone explained that many older people do not want to move from the communities they have been living in for many years, noting that there is a huge opportunity for further later living developments in central London. Will Bax of RVG commented that there is an ‘emerging generational mindset shift towards connected living’. They want to build developments in locations where customers are able to walk into the closest town and create amenities that are open to the wider public. It is clear that together as a sector, operators are focused on flipping the perception that these developments are exclusive to older people.
As with last year’s discussion, the types of tenure available and policy agenda are still key challenges, however there has been positive movement in the right direction, with 67% of operators now offering rental options. There also needs to be more awareness with local councils in order to achieve planning permission for developments. Currently only 20% of local authorities have supportive planning policies or sites allocated to senior housing. With nearly 12 million people aged 65 and above in the UK and half of those reporting they would be happy to downsize if the right options were available, the opportunities for the sector are huge.
Knowledge is everything and further access to accurate data is essential to an expanding seniors housing market. As with last year’s annual review, it was heartening to hear how senior living operators are committed to continue working together through ARCO and Knight Frank, sharing their data to drive the sector forward. As a practice, we will continue to work collaboratively with operators to deliver first class interiors for our ageing population, breaking down the stigmas related to housing with care. We’re also very much looking forward to attending the ARCO conference in November to hear further insights relating to the shifting dynamics of the sector!