Moorfield Group is planning to invest £700m (€796m) in luxury retirement villages in the UK on behalf of US and continential European investors.

The UK-based fund manager said it had raised nearly £300m from foreign investors for its Moorfield Audley Real Estate Fund.

The fund was created in December 2015 to acquire Audley, a retirement village developer and operator.

Moorfield has recently raised a further £85m taking total third-party equity to £285m. Factoring in development income and investment debt, Moorfield will have £700m to invest in the sector.

The new funding will enable Moorfield to buy and develop more Audley Villages over the next five years, as well launch a new mid-market proposition, Mayfield Villages.

Moorfield now oversees 15 Audley luxury villages, which when completed will provide at least 2,000 units nationwide. It has plans to create 500 units under the Mayfield Village brand.

Marc Gilbard, Moorfield Group CEO, said: “The retirement living sector has become one of the biggest growth areas in UK real estate.”

He added: “The new capital will give Audley the opportunity to acquire new sites, develop existing sites and allow the expansion of the business.”

Nick Sanderson, Audley CEO, said: “This latest round of fundraising further underlines what we at Audley and Moorfield have known for some time: retirement living in the UK is a growth market, principally as a result of the significant shortage of retirement housing and growing demand is now vastly outstripping supply.

“Market penetration is less than 1% in the UK, compared with 17% in the US, and 13% in Australia and New Zealand.”