Retirement living developments are set to be a major growth driver for UK property developers over the next year, according to research from Shawbrook. 

The research found two-thirds (66%) of property developers expected the commercial property market to improve in the next 12 months. 

Of those, 19% said they expected significant improvement and 47% said slight growth. 

In 2024, 64% of developers said the market had already improved, 11% significantly and 53% slightly.

Retirement living projects were seen as the most profitable area for commercial property growth. 

42% of developers picked the sector as the best opportunity, ahead of hospitality and leisure at 37%, retail in cities and towns at 32% and student accommodation at 31%. 

Other sectors tipped for growth included semi-commercial units (30%), out-of-town retail (23%), warehousing (22%) and hospitals (19%).

Terry Woodley, MD of development finance at Shawbrook, said: “The data reflects a changing landscape for developers where demographic trends and economic challenges are shaping demand across different types of commercial property.

“As developers seek stable returns and long-term value, the retirement living sector stands out as a key focus area, aligning with the UK’s aging population and evolving housing needs. 

“Developers will also have a key part to play in helping the Government achieve its lofty housebuilding targets, which requires a collective, multi-pronged approach to provide adequate housing for different generations and demographics.”

Woodley added: “Despite economic headwinds last year which have carried through to 2025, developers have proven themselves to be agile and resilient – with the majority being able to grow their businesses. 

“This trend looks set to continue in the second half of this year, as many diversify their projects and build robust income streams.”

Dasos Kirksides, head of healthcare at Shawbrook, said: “The retirement living sector has proven remarkably resilient in recent years which have been marked by economic headwinds, numerous regulatory changes and volatility in the wider markets. 

“As we look forward to the rest of 2025, the signs are really positive. With the economy growing and the most recent interest rate cut easing the cost of debt for operators, the sector is well set for growth. 

“As part of the Government’s housebuilding plans, flexible and innovative solutions are needed to provide adequate retirement living options, which presents an excellent opportunity for property developers.”