UK needs 50,000 new senior housing units per year – AEW

AEW’s "Unlocking Senior Housing Demand" report indicates a need for 50,000 new senior housing units annually to meet current and future demand in the UK.

Hans Vrensen

However, new deliveries are only forecast to average 14,000 units per year until 2030, leading to a decreasing provision rate per capita.

Improvements in healthcare and increased longevity are leading to a rapidly ageing population. The number of individuals aged 80 and over is expected to grow by 20% in the next five years, with those aged 85 and above projected to increase by 50% to 2.7 million by 2040.

Currently, 88% of the UK's 13.8 million seniors (aged 65+) live independently in their homes. Of the remainder, about 880,000 reside in social rented housing, 450,000 in nursing homes, and fewer than 300,000 in private purpose-built senior housing. Notably, less than 2% of seniors in private purpose-built accommodation live in rented units, indicating a penetration rate below 0.1% and fewer than 5,000 private rental units in the UK.

Approximately 5.8 million people aged 65 and over have more than £500,000 in housing wealth, and 2.6 million are in households with more than £1 million in wealth.

In 2024–25, prime senior housing in Southeast UK has yielded attractive excess returns of 13–14% per annum, outperforming comparable sub-sectors like London build-to-rent residential.

Senior housing is needs-based and demographically driven, making it less correlated with economic cycles than traditional commercial real estate. Its proven income durability, severe scarcity, and increasing institutionalisation present an attractive opportunity for robust risk-adjusted returns.

Hans Vrensen, head of Research & Strategy Europe at AEW, commented on the report: “The current share of seniors living in purpose-built senior BTR units remains extremely low at just 2%, but this is expected to grow over time, driven by the benefits this model offers residents, operators and investors alike. For residents, it provides flexible commitments; for operators and investors, it delivers higher absorption rates, recurring, predictable income streams, and lower correlation with housing market cycles compared to the for-sale model. Senior BTR is attracting growing attention from institutional investors supported by its robust risk-adjusted returns.”