Senior housing is becoming a hot spot in the UK real estate industry, with Goldman Sachs Group Inc and a growing group of investors betting on the need for luxury in retirement.
The US bank is one of the backers of Riverstone, a real estate company building 10 blocks of swanky apartments for seniors in London. Goldman Sachs said he plans to put £3 billion ($3.5 billion) into the company over the next five years, and so far he has completed two projects in Kensington and Fulham.
Martin Earp, who took over as Riverstone’s chief executive in June, said the Kensington complex “breaks the retirement rules” with floor-to-ceiling windows and balconies or terraces in each of its 190 apartments. I was. 3 million pounds.
“From baby boomers to their parents, we’re seeing a clear shift in retirement behavior,” says Earp. “There are people who have lived in London most of their lives and want to continue enjoying the abundance of amenities on their doorstep.”
Most retirement housing in the UK is built for social renters, but a rapidly aging population means that demand is rising in many niches of the market, and a shortage of supply is driving house prices down. has been pushed to a record high. Almost one in five people in England and Wales is over the age of 65, according to the census released last year. By 2043, nearly one in four he will belong to this group.
A record £2bn was invested in UK senior development in the first nine months of 2022, with the total set to rise to £3bn by the end of the year, according to broker Knight Frank. That would be a 50% year-on-year increase as backers such as UK pension funds and private equity enter the sector, according to a Knight Frank report released this month.
“We can afford to invest even more in senior housing in the next few years,” said Oliver Knight, Knight Frank’s Head of Housing Development Research. is.”
Kensington residents will be part of the Riverstone Club, which offers access to facilities such as a spa, espresso bar, Italian restaurant and private cinema. There is also a gym with detailed health monitoring of residents, as well as sensors and floor-level buttons to alert staff to medical emergencies.
“This is the generation that invented the word ‘teenager’, the generation that was partying in school and college, and they didn’t have a job for the rest of their lives. We were dealing with it,” Earp added. “This is something we’ve already seen in Australia, the US and Canada, where integrated retirement communities form a significant part of his 65+ housing.”
Pensioners in the UK have traditionally been reluctant to embrace such a lifestyle, partly put off by concerns about the burden of administrative costs and the terms of leases of such developments.Riverstone Fixed membership fees start at £1,485 per month for apartments of all sizes.
In addition, headwinds to the UK economy from rising inflation and the global energy crisis will make borrowing more difficult, impacting the availability of funds for new development. Knight Frank says this could put pressure on the timescale of his investment, which is scheduled for the fourth quarter of 2022.
Still, investors with a long-term view believe the demographic is leaning toward retirees who need adequate accommodation. Knight Frank surveyed his 54 agencies and found that only 31% of him are currently active in the senior housing sector, but 67% expect to be active within his five years. , which is the largest projected increase in any sector of the poll.
Tom Skaife, head of Knight Frank’s senior housing team, said, “There is a compelling case for assets that will benefit from long-term demographic change, such as lifestyle changes and senior housing. The investment case remains,” he said. “Investors are looking at both development returns and long-term cash flow, which is underpinned by a surge in HNWIs with downsizing tools.”
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