Cushman & Wakefield reveal top real estate requirements for 2040

Cushman & Wakefield's report found that Seniors Housing requires existing stock to increase by 171.3%, followed by Data Centres at 98.9% and Life Sciences at 53.4%.

Build to Rent building, part of the rental market - Cushman & Wakefield | BTR News

Real estate services firm Cushman & Wakefield has released insights from its ‘The Shape of Real Estate’ report. The detailed analysis of demand-side drivers revealed that Seniors Housing, Data Centres and Life Sciences top the UK sectors, requiring an increase in commercial and residential property stock by 2040.

In quantifying the spatial requirements for the UK’s fastest-growing sectors over this period, the report shows that the stock needed in 2040 will be driven by behavioural and economic change due to technological advancement, demographic shifts, and the evolving standards and requirements of the built environment.

With the number of over-65s expected to increase by nearly four million to nearly 17 million between today and 2040, Seniors Housing requires the greatest growth – in percentage terms – in stock to meet demand. At an increase of 171.3% on existing levels of Seniors Housing, the total change is proportionally more than all other sectors.

“Understanding demand-led variables helps to identify the imbalances in the UK real estate portfolio and in turn shape future cities. The largest requirements for additional stock are projected to be focused towards housing, and caring, for an ageing population. However, we expect the logistics and industrial and living sectors to attract the most investment through to 2040, and in turn increase the competition for space. Looking ahead to see the trajectory of real estate in the years, and indeed decades, to come has never been more important.

“Yet there are significant external factors that will weigh on the potential for real estate to respond, including the ongoing impact of inflation, government policy and evolving environmental and business standards. The real estate market is constantly responding to how we use space, and as the number of properties increases, alongside growing capital investment, the rate of change will only continue to gain pace.”

Daryl Perry, Head of UK Research & Insight, Cushman & Wakefield
Cushman & Wakefield | BTR News
Source: Cushman & Wakefield.

Despite projections of a more subdued rate of economic and population growth in the UK than from 2005-2023, the requirements for real estate continue to be significant. Cushman & Wakefield’s projections for annual increases in the requirements for the life sciences, hotels, and logistics and industrial sectors range between 2.6% and 0.9%.

Similarly, housing demand is not expected to ease materially through to 2040 due to slowing population growth being offset by people living longer, rising numbers of single-person households and migration. Owner-occupied homes are expected to see the lowest level of growth as affordability remains challenging amid the supply and demand imbalance, while PRS is projected to grow its share of tenure, reflected in a projected 43.1% required increase in stock.

“Despite increased awareness of the UK’s ageing population and the burden this will place on the UK’s public services, the delivery of seniors housing has barely increased. As our research shows, it is essential that delivery increases substantially if older people are to live healthier and happier lives for longer. Increasing the number of age-appropriate homes will help relieve some of the pressure an already struggling health, social care and housing system is set to face as well as releasing non-age restricted housing stock helping ease the supply demand imbalance.

“Our report estimates a further four million dwellings will be required by 2040 and even that rate of construction will just maintain historic trends rather than address the chronic shortage of homes.” 

David Haynes, Head of Specialist Markets, Cushman & Wakefield