...but faster growth will soon be needed to meet demand.

The value of the UK’s Top 15 senior living providers has increased 62% in the past five years, to reach £4.03bn up from £2.49bn five years ago. However, the industry will have to go through far faster growth to meet demand for retirement living outside of traditional care homes.

The care home health crisis during the coronavirus pandemic has highlighted the necessity of providing high-quality, lower density housing specifically for older people.

Senior living enables older people to retain their independence whilst living in more luxurious surroundings than the typical care home, with a wealth of facilities at their disposal. These facilities include restaurants, cafes, spas, swimming pools, communal lounges, fitness studios and salons. These community facilities provided by senior living will be crucial in helping to combat loneliness amongst older people – a problem exacerbated by the forced isolation of senior citizens due to coronavirus.

The UK’s senior demographic is projected to grow faster than the rest of the population with the current expectation that there will be an additional 3.9m people of pensionable age by 2043 – giving a total of 15.9m (source: ONS).

The increase in the value of the sector has been driven by expansion, as major providers rush to construct new developments and increase their share in the rapidly growing sector. Legal & General’s Inspired Villages has announced plans to build 2,500 specialist homes in the next six years. Riverstone, which was acquired by Goldman Sachs plans on building 2,000 new homes in London by 2027 and AXA-backed Retirement Villages Group is targeting as many as 6,000 homes across 30 new sites by 2030.

The growth potential of the senior living sector has also attracted interest from private equity firms. Beechcroft was acquired in early November by the US investment fund, Carlyle, whilst Lonestar has struck a deal to acquire McCarthy & Stone for £630m.

It is clear that senior living is growing fast, but this growth will need to be vastly accelerated if demand is to be met. As it is a capital intensive industry, bringing in funders such as PE houses and pension funds is essential. While it is encouraging that providers are responding to increased demand, factors such as the UK’s ageing population and a lack of suitable quality housing for seniors mean that construction of senior living developments will need to be ramped up significantly.

Coronavirus has made high-quality housing more vital than ever before. With many older people prevented from seeing relatives, there is an urgent need for communal facilities that will enable interaction and foster a sense of community. With many families wanting their parents and grandparents to be living in an environment that offers more independence than a care home, this is a sector we expect to see continuing to grow and diversify in the near future.