Chronic undersupply of Seniors Housing looming, JLL finds

According to JLL research, the shortfall of Seniors Housing is driven by an ageing population and limited pipeline supply.

Courtyard garden at Birchgrove's Chiswick later living development in Hounslow | BTR News
Courtyard garden at Birchgrove's Chiswick later living development in Hounslow.

Global real estate services firm JLL has launched its UK Seniors Housing Report, which reveals a shortage of up to 46,000 homes in the next five years for UK seniors. The report attributes this shortage to an ageing population and inadequate pipeline supply.

Based on JLL’s analysis of pipeline developments and forecast population growth among the over 75s, the report highlights that approximately 36,700 Seniors Housing units currently in planning are expected to complete by 2029. This would raise the total market size to about 808,500 units. However, to maintain current penetration rates, the UK would need over 840,000 units, resulting in a shortfall of 31,500.

However, not all planned schemes will receive approval. If only approved schemes are delivered, the shortfall will rise to 45,900 units. This deficit is expected to worsen as the demand for Seniors Housing accelerates due to longer life expectancies and increasing health concerns.

According to the JLL report, the Seniors Housing sector in the UK has experienced a compound annual growth rate of 0.8% since 2019, totalling 771,848 units across Retirement Housing and IRCs (Integrated Retirement Communities). In comparison, a more mature market, such as New Zealand’s, has grown at a rate of 5.4% per year over the last decade.

“With our population of those aged 75 and above forecast to increase by 11% in just five years, the need for more Seniors Housing units has never been more apparent. Beyond quantity, we must ensure to offer a range of high-quality options to fulfil the diverse requirements of seniors, from those desiring social rent, accounting for 72% of Senior Housing, to those looking for private ownership and rent opportunities, a segment that has seen growth of 20% since 2019.”

Anthony Oldfield, Director, Healthcare Capital Markets, JLL

Despite offering greater amenities and care levels, and only forming 12% of current Seniors Housing stock, IRCs are the fastest-growing segment, expanding at an annual rate of 3.6% over the last five years. IRCs are projected to become the dominant form of Seniors Housing, accounting for nearly half of the sector’s delivery since 2019.

JLL highlights that the growth of IRCs will need to address the imbalance between the proportion of affluent older individuals and a sector that primarily offers affordable tenures. Currently, 72% of Seniors Housing comprises social rent, compared to just 17% in the wider housing market. Market rent makes up only 0.5% of Seniors Housing schemes, while it represents 20% of all housing.

The report demonstrates the private rental market as a significant growth opportunity within the Seniors Housing sector. Although still a small component of tenure makeup, the number of predominantly market rent schemes has risen by 20% since 2019, particularly within IRCs, where the rate of growth among market rent schemes is over double at 42%.

While only 3% of IRCs are primarily market rent, 10% include an element of market rent. That proportion has doubled since 2015.