The supply of beds in the UK healthcare market reduced for the first time by 177, despite the continuous demand with an expected shortfall of more than 200,000 beds by 2050, according to global property advisor, Knight Frank.
Knight Frank’s ‘Healthcare Development Opportunities’ report outlines the UK care home market consists of older, converted stock that, in some cases, may be considered obsolete. This comes down to size, and lack of en suite or full wetroom facilities. With this in mind, an opportunity presents itself to those willing to repurpose and reposition the current supply. The Covid-19 pandemic highlighted the need to focus on virus control and wellbeing, while ESG and net zero pressures will also play a role in the direction of future supply. However, what is apparent now more than ever is the need to pay attention to the weak points in the current supply and, as a sector, work to rectify these.
While 2022 saw a circa 15% dip in the number of new homes completed, we have seen a promising start to 2023, which is likely to have benefited from the delayed completion of some of homes that had been due to complete last year. In 2022, approximately 10,000 new beds were granted via planning application. This number represents a mix of refurbishment and extensions to existing stock as well as new-build schemes.
While completion of these schemes will add to the circa 480,000 existing bed supply, an important consideration is the scheme type and delivery potential. Knight Frank’s Development Hotspots Index gives a simplified insight into which locations offer the best prospects for care home development. The index highlights the dominance of the South East and East of England, with seven of the 12 hotspots falling into these regions. This also includes Greater London, which has the second-highest index score this year.
Julian Evans, Head of Healthcare at Knight Frank, said: “The UK elderly care market is at risk of reaching capacity by the end of the decade, and this is a worrying projection. Not only must we build more care homes, but we must take action to support standing stock to reduce the level of home closures, which continues to work against the delivery of new homes as we attempt to grow the supply level.”