Earlier this year Tony Blair commented on the influence of automation, artificial intelligence and big data and how this is going to transform the global economy. He drew our attention to Germany and their programme of digitalisation of industry, a programme which he believes will improve Germany’s ability to operate in the modern world. He compared this to the UK's challenges of redefining the welfare and retirement system. Mr Blair raised concerns that "the technology is revolutionising yet we are not even debating it."
In politics, perhaps, but the property industry has hosted a number of debates recently focusing on technology and its ability to accommodate our ever-increasing longevity. The industry has also produced several reports which undermine Mr Blair’s opinion.
The impact of the post WWII baby boomers reaching retirement and the consequential increase in the proportion of senior citizens is clear from the stats. At a seminar focused on later living and delivered by the Urban Land Institute in October this year, we were told that:
- over 20% of the population will be aged 65 and over by 2025. That figure is expected to rise to over 25% in 2045;
- one out of three children born today will live to 100 - we are currently adding 2.5 years to our lifespans every decade;
- the number of people over 85 in the UK is predicted to more than double in the next 23 years - reaching over 3.4 million; and
- four generations are now active in the workplace and the concept of pensionable age is shifting.
The consequences for the property industry of an ageing population are significant. As identified in the Platinum Generation Report from Strutt & Parker, only 2% of the UK’s housing stock is designated as retirement accommodation and it houses just 1% of Britons in their 60s. Their research quotes Age UK’s figures, which state that if just half of the 58% of over-60s who are interested in moving were able to do so, it would release £356 billion-worth of property into the market, of which nearly half would be three-bedroom homes.
The lack of supply creates opportunities for many developers with knowledge of this market, and technological advances are enhancing those opportunities. According to the Platinum Generation Report, more of our elderly population are seeking flats than any other property type, and over two thirds state Wi-Fi as a key service within a retirement village - this was more important to them than any other service.
There is a growing media focus on the activity taking place in the market, such as Legal & General’s acquisition last month of Helical Bar plc’s retirement villages portfolio named Renaissance Villages, for a net purchase price of £51m. At Kingsley Napley we are seeing plenty of consideration being given to the opportunities that exist in this sector, by clients with requirements ranging from real estate to employment, family matters to estate planning.
James Dearsley, a well-known PropTech commentator, last year summarised the benefits that technology can offer in the later living sector exploring, for example, the advantages of equipping properties with fall detectors, activity monitors, smart shopping, heating and cooking devices. The views expressed at the ULI later living conference on technology and its impact on senior generations were both enlightening and thought-provoking, especially as many of the concepts can be used to combat some of the toughest challenges of later living, such as loneliness, dementia and poverty. However some critics argue that there can be a tendency to focus overly on the types of technology which are available, rather than analysing their impact on day to day life. One of the ULI conference panellists observed that, according to the Gartner Hype Cycle, a “peak of market noise” for driverless vehicles in 2015, was swiftly followed by a "trough of disillusionment". The challenge before us now is to ensure that the wealth of ideas surrounding PropTech and later living are converted into a real improvement in the properties on offer to the older members of our society.