COMMENT By 2030, the number of 65-74-year-olds across the UK will have increased by 16%, the 75-84 population will be 27% higher and there will be 22% more over-85s; this works out at a total of 2.2m people aged over 65. That’s around twice the population of Birmingham.
What can the senior living industry do to cater to this demographic, with differing needs at different stages of their lives? To better understand this growing residential sector, CBRE conducted a survey of more than 2,000 people aged over 55 across the UK to see what seniors want from their residential options as they age, and where the opportunities for developers and operators lie to satisfy this demand.
Marketing boost
Despite three-quarters of respondents aged 75 and above stating that they have had exposure to senior living, the survey findings highlighted overall misconceptions around what the senior living model entails.
There is general group consensus that senior living facilities focus on registered care homes rather than living independently, which indicates that the industry needs to improve its marketing to increase understanding of the senior living concept and its benefits.
With more than half of both the 55-64-year-old cohort and the 65-74-year-old cohort having no experience of the sector, herein lies the target market over the long term. Informing the future users of senior living facilities about the services and amenities that are included could result in increased engagement, demand growth and a much-needed response from operators.
The findings also revealed a clear supply and demand imbalance across the UK, with take-up of senior living hindered by lack of understanding and limited availability of affordable options.
We estimate that there is an undersupply of 614,000 senior living units in the UK, with supply particularly constrained in Birmingham, Edinburgh, London and Southampton, as well as in rural communities.
Furthermore, the lack of mid-level offerings may price out potential residents, heightening the pressure on the operator and developer market to explore new opportunities.
Enter the middle market
One way to tackle the undersupply and provide a wider range of affordable facilities is for investors to expand the mid-market offering.
Historically, senior living schemes have targeted prospective residents who live in more affluent areas of the UK owing to the high costs of land and construction.
However, on a national scale, the majority of housing wealth distribution falls into the £250,000-£500,000 value segment, meaning there is a large group who would benefit from senior living schemes if there was a more affordable option.
Surprisingly, almost two-thirds (63%) of respondents in the over-75 bracket have not yet downsized since retirement, signalling a large potential cohort for senior living schemes.
Although there are residential options available for seniors considering downsizing, new-build, age-inclusive models have typically been targeted at families or young professionals. Other residential models have not been built around social interaction and care for those aged over 65. If the senior living provision rate can reach an industry target of 5%, this would alleviate housing pressures as well as providing age-appropriate housing where wellbeing and social interaction are key.
Amplifying choice, improving quality and thinking beyond purchase-driven options will support evolution in a sector that has huge potential for growth.
Jennet Siebrits (pictured left) is head of UK research and Ashleigh Bryant (right) is director of operational real estate at CBRE
