Lack Of Supply In The UK Care Home Market Despite Increased Demand
The UK care home market continues to grow at a lacklustre pace in terms of bed numbers, with the past year seeing a marginal net gain of only 43 beds combined with a net loss of 86 care homes, according to the latest research by leading global property adviser Knight Frank.
The annual UK Healthcare Development Opportunities 2019 research report showcases the trend that the number of new homes being built continues to be counterbalanced by the number of home closures. However this has not resulted in a loss of overall beds as typically smaller care homes have closed whilst larger, more efficient and viable schemes open throughout the UK and existing care homes are undergoing extensions and refurbishments.
Knight Frank’s annual UK Care Home Development Index identifies which UK locations present the best prospects for investment and development. This year, South Glamorgan pipped last year’s leader Greater London to top the hotspots list in England and Wales. South Glamorgan is experiencing strong economic growth but has limited levels of new supply despite the relatively cheap cost of land, whilst Greater London is expected to see an over 65 population growth of 500,000 in the next 15 years. The top five in England and Wales are South Glamorgan, Greater London, Buckinghamshire, Wiltshire and Berkshire.
Julian Evans, Head of Healthcare at Knight Frank, said: “With much of the UK’s existing care home stock outdated and elderly population growth expected to drive unprecedented levels of bed demand going forward, it is clear that more care homes need to be built. Though there was a marginal net gain of beds over the past year, this is still not enough to address the crisis in provision and is likely to be further exacerbated as the next generation requirements for care grows at a faster rate than new care homes can be developed.
“Our analysis shows that the UK is already short of 100,000 market-standard beds and this will worsen over the next two decades unless existing stock is upgraded and the rate of new builds increase.
“Owing to the scarcity of stock and ongoing demand, the investment appetite for new care home schemes remains strong and opportunities exists for both investors and developers, with our Hotspots Index highlighting the range of opportunities nationally.”
Care homes are closing owing to a variety of factors including the rise in the National Living Wage, which has further impinged on an already constrained labour market and ongoing staffing challenges including an acute shortage of qualified nurses. Many buildings are not fit for purpose and are failing care standards, with two-thirds of those closed rated ‘inadequate’ or ‘requires improvement’. This is compounded by the insufficient funding available for reinvestment into existing care homes, mixed with building material inflation costs and construction costs which have confined new care home development.
