Savills has over 10 years' experience in the graveyard and crematoria sector and has seen the market evolve from niche and often municipal operators into an admittedly small but more widely attractive investment sector worth exploring.

According to research compiled by UK Funerals Online, the UK funeral market is currently estimated to be worth around £1 billion annually, with more than 600,000 funerals taking place each year. A growing population creates a greater demand for burial space and many graveyards around the UK are expected to reach full capacity within the next five years.

At the same time, the demand for crematoriums is also on the increase, with 74 per cent of all deaths cremated in 2014 compared with 65 per cent in 1980 and 35 per cent in 1960, according to The Cremation Society of Great Britain. This increase is largely down to cost – cremations are significantly cheaper than burials – and the fact that fewer people are tied to the Church nowadays.

Once solely owned by local authorities, the burial ground and crematorium market has diversified to include private providers as municipal sites have filled up. The shortage of burial space, as well as increased cremation costs caused by the 2005 DEFRA requirement for mercury to be removed from 50 per cent of cremations, have made way for Dignity, Westerleigh, Co-op and a number of smaller private operators.

Five new crematoria opened in 2013 and three in 2014. Such new schemes are undertaken on freehold or leasehold sites – the latter usually on ground leases with a base rent and turnover percentage top-up. There are, of course, significant restraints on site suitability in terms of location, proximity of housing and most importantly demand for the proposed service. Successful sites generally occupy five to 10 acres – more if burials are envisaged as well – to incorporate adequate car parking and landscaping. The Cremation Act 1905 (Section 2) gives the basis for further reading.

Private operators can provide long-term tenancy and a guaranteed rent, which is an appealing option for landowners looking to alternative uses for Greenfield sites. We are seeing increased interest from entrepreneurial developers looking to acquire key sites – either freehold or leasehold – that are easily accessed and within close proximity to an existing population which in turn generates demand and value.

Burial grounds can be less controversial, particularly in the countryside, and can take an increasingly wide range of forms, from green burials in an open field to woodland burials in mature forestry. The traditional wooden casket is now more often challenged as a choice, with cardboard and wicker alternatives as well as shrouds, becoming more acceptable alternatives.

More frequently we are seeing provision of space for funeral parties to assemble before the burial or cremation, as well as for the wake or other gatherings afterwards.

There are a couple of caveats. It's vital that consideration be given to the water table and local planning policies. It is also favourable for developers to involve a cremation or burial provider from the outset in order to avoid investing in a site that isn’t viable.

Savills anticipates the sector will continue to evolve in order to satisfy demand for burial space and a desire to be cremated in turn presenting opportunities for worthwhile investment.

Further information

For more details, contact Savills Leisure & Trade