Scotland and r-UK remains far behind international trends in the provision of purpose built retirement housing of the type seen in the United States and Australasia, often including facilities such as libraries, restaurants, health clubs and care support.
It has been estimated that no more than 1% of people in the UK live in specialist retirement housing compared to 17% in the United States and 13% in Australia. It is also estimated that by 2025 over 20% of the UK population will be over 65. Against a further estimate than 3.3 million people in the UK, many with significant equity in their current homes, would like to downsize, we are apparently only delivering about 7,000 specialist homes per year.
So given the latent demand is there, is it time for this alternative asset class to see a surge in activity?
There have been challenges in the past arising from concerns over market values exit fees and management charges. However, lessons from abroad, both in how to structure attractive and sustainable developments and how to cater for varying levels of free equity availability, dictate that this is a market which should succeed here.
Other challenges surrounding land supply and the planning system, including section 75/106 affordable housing contribution requirements, continue but as investors and funders target alternative residential assets classes beyond student accommodation and build to rent, the specialised retirement living market potentially provides a great untapped market.
As developer and investors search for improved returns, retirement living, often with the benefit of denser layouts, lower parking requirements and additional income streams, offers an attractive proposition to traditional housing development.
Retirement living is an integral part of the wider housing market underpinned by huge demographic demand, and as it grows and matures as a specialist sub-sector, this will lever in investment and finance. In the interim, for early adopters there are likely to be significant market opportunities.