A record £2 billion was invested in the UK senior housing sector in 2022, Knight Frank has revealed.

Launching its Seniors Housing Annual Review yesterday, Knight Frank said it expected a further £1 billion investment in the sector taking volumes to £3 billion in 2022, up by 50% on the previous year.

Tom Scaife, Head of Seniors Housing at Knight Frank, said: “Capital has recognised the market opportunity of seniors housing, and investment into the sector is coming from a wide variety of sources including UK pension funds, investment managers, private equity and private capital. The last two years have also seen significant growth in the amount of North American money entering the market.

“The investment case for seniors housing is strong. There is a huge addressable tenant market with high levels of affordability, given many are downsizing from an unmortgaged family home. There is also an imbalance between growing demand and extremely low supply. Rental growth and long term cashflow growth are underpinned by HPI and inflation-linked tenancies.”

While there are expected to be an additional 2.5 million over 65s in the UK over the next 10 years, only 39,000 seniors housing units are currently planned, suggesting supply cannot keep up with demand.

Meanwhile, investment into residential has grown from around 10% of total UK real estate in 2012 to almost 25% this year.

Highlighting that the current inflationary environment may impact current development, Knight Frank said investors able to deliver strong development pipelines could benefit from first-mover advantage.

Scaife concluded: “There remains a compelling investment case for assets that benefit from changing ways of living, and long-term shifts in demography, such as seniors housing.”