At the end of 2025, Octopus Capital – the real assets arm of Octopus Investments – announced the construction of two retirement living sites, which it says will help “tackle the UK’s chronic undersupply of specialist housing for older people”.
The projects in Surrey and Oxfordshire provide hundreds of new places for those needing “active, independent living”, and adds to the estimated 30,000 to 50,000 new later living homes needed each year to serve the surge in growth of the UK’s older population.
Contributions to the UK’s pipeline of social real estate will be positive news to the multi-billion-pound local government pension scheme (LGPS) pools which are tasked with not only delivering returns to members but making a positive impact in their immediate communities.
Among the LGPS already investing with Octopus Capital are Strathclyde Pension Fund, London CIV and the Avon Pension Fund.
As part of the asset manager’s focus on social real estate, this January Octopus assigned Michael Toft in London and Cristina Perez Liz in Madrid with additional roles as Co-Heads of Real Estate Investment whilst continuing to manage their respective business areas as Head of Care Homes and Head of Spain.
Toft says: “We are trying to deal with some of the biggest housing problems in the UK whilst giving a financial return to investors. We don’t feel we have to sacrifice one for the other.”
Octopus Capital’s real estate team invests across the living sectors through debt and equity strategies, and is approaching GBP4 billion in assets under management.
Toft acknowledged that it has been “a difficult few years raising institutional capital” for real estate projects with higher interest rates seeing a pause in institutional allocations.
Yet this is a temporary blip, Toft said and does not signal a loss of long-term conviction in real estate and many institutions are predicted to re-enter the market this year.
“We are trying to ignore the macroeconomic background and focus on the fact that the performance of the underlying real estate in the sectors we are in is still really strong.”
The appointment of Perez Liz reflects Octopus’s ambitions to expand its social real estate investment into continental Europe.
Perez Liz notes that Spain faces many of the retirement living challenges as those experienced in the UK, creating a clear demand for a pipeline of suitable accommodation.
“There is a huge need for senior living in Spain because the country is going to gain around three to five million additional people aged 65 by 2030. Senior living is not an established asset class in Spain and there are only a handful of retirement complexes. They are not homogeneous nor are they standardised. So, we feel there’s a very strong need to create that product,” she says.
Research from Octopus finds just 2.5 per cent of Spain’s housing stock is social housing, which compares to around 10 per cent when combining public and private social housing in France and Germany.
Toft says investor appetite for UK affordable housing is well established, and the Spanish market is poised to become one of Europe’s next major opportunities.
Perez Liz adds: “Strong demographic demand also supports high occupancy, adding another layer of resilience for investors. This makes affordable housing comparable to infrastructure investment: stable income, long duration and clear social benefit.”
