Where next for the UK Living Sectors?
Knight Frank’s NextGen Living Report includes the results of our annual Investor Survey which represents the views of 56 institutional investors active in the sector who account for£60 billion in Living assets under management in the UK.
2 minutes to read
The Living Sectors are expanding. Institutional investment across the purpose-built student accommodation, build to rent and seniors housing sectors has grown significantly in recent years. Since our first survey in 2019, more than £66 billion has been spent acquiring or funding Living Sector assets in the UK.
In 2024 alone, Living Sectors investment in the UK stood at more than £10 billion, up 2% on last year. By now, the fundamental drivers are well established; migration, urbanisation, ageing populations, increasing numbers of international and domestic students, and lifestyle choices, are all structural tailwinds that bridge economic cycles.
Today, there are an additional 600,000 renters in the UK versus a decade ago; full-time student numbers have increased by an additional 580,000 over that same time, and nearly 1.8 million people have turned 65 at a rate of 177,000 a year.
Yet, despite the supportive drivers, there are important nuances that investors need to consider. The big question for existing and future strategies is how best to adapt to the changing pressures in the market.
Our survey, now in its fifth year, provides unique perspectives into the opinions and preferences of 56 leading institutional investors representing a combined £60 billion in Living Sector assets under management in the UK. The findings reveal more about what, where and how much they plan to invest over the next five years. Together, they account for around a third of the investable market.
The results confirm that the prospects for the sector remain strong, with all surveyed investors planning to increase their exposure to the sector in the coming years, including nearly a quarter who plan to more than double current investments.
These ambitions will be supported by an improving near-term macroeconomic picture. After a brief pause at the turn of last year, UK growth has generally exceeded expectations, inflation is forecast to stabilise around target levels and the Bank of England (BofE) has fired the starting gun on a new rate cutting cycle. Financing is once again accretive to returns.
However, short-term volatility remains, particularly given the large tax and spend programme announced in the Budget, and there are challenges around planning and building regulations. But there is also a degree of certainty going into 2025 that hasn’t been present of late.
As we discuss in the report, this stability should pave the way for an acceleration of ground-up development, repurposing and value add investment and early entry opportunities into a wider range of markets. For institutional investors, the Living Sectors continue to represent a well-established opportunity to diversify, reduce volatility and support returns.
To read the full report, please click here.