UK Care Homes Face National Bed Crisis

– 6,500 care homes totalling 140,000 beds at risk of closure –

– Covid-19 has accelerated need for investment into UK healthcare property sector –

The Covid-19 pandemic has highlighted the need for investment and innovation in the UK healthcare property sector, with long-term demand due to an ageing population combined with the accelerated closure of underperforming assets leading to a national bed crisis in care homes, according to the latest research from global property adviser Knight Frank.

Knight Frank’s research identifies a potential 6,500 care homes at risk of closure over the next 5 years, equating to 140,000 beds. This shortage will be exacerbated by the increased demand for care homes by 2050, which will see a national bed crisis in the UK as the share of people over the age of 80 is expected to surge over the next 30 years, with one in ten adults set to be over 80 by 2050, compared to one in twenty currently.

Estimating that the UK requires in excess of £15 billion to upgrade existing beds in order to future-proof for the ageing population, Knight Frank states that the Covid-19 pandemic has accelerated trends that will lead to closures of care homes that are no longer fit for purpose, resulting in a significant national shortfall of bed provision.

Furthermore, the UK ranks lower than other advanced European economies for its bed provision, behind Belgium, the Netherlands, France and Germany, with only 13,000 elderly care beds per 100,000 people over 80. Belgium and the Netherlands have a significantly higher proportion at over 25,000 elderly care beds per 100,000 people over 80.

Julian Evans, Head of Healthcare at Knight Frank, said: “Whilst the Covid-19 pandemic has demonstrated the outstanding collaboration between the private sector, social care sector and NHS at this time of need and the strength in controlling infection levels, it has also unfortunately highlighted the lack of investment by successive governments into the UK’s healthcare sector, and therefore the urgent need to prioritise preventative and crisis funding.

“At present, there is not enough care bed capacity and there is a structural under-provision of beds in the social care sector. The pandemic has accelerated trends to scrutinise those buildings that are not fit for purpose whilst emphasising the insufficient funding available for reinvestment into existing care homes, which has therefore expedited the number of potential care home closures. This will result in a national bed crisis unless significant inward investment in the UK care home sector is taken. Our research shows that 6,500 care homes are at risk of closure currently, which is before we take into account that the peak of demand will continue to 2050 as our population continues to age.

“Once the situation resolves around the Covid-19 pandemic, we will see a number of changes around how operators fare and we expect that with the scarcity of stock and a continuing ageing population driving demand, the investment appetite for care home developments will remain strong. There will undoubtedly be a flight to quality as investors seek defensive healthcare assets and we anticipate that investment into the sector will be robust, from a broad church of domestic and overseas investors.”

The Covid-19 pandemic has placed additional pressures on the care home market which had already seen closures due to a range of factors including the continued impact of the National Living Wage affecting an already constrained labour market and ongoing staffing challenges, with an acute shortage of qualified nurses, combined with restrained care home development owing to building material inflation costs.

Knight Frank expects that care home design will adapt to meet future virus experience and that care homes will need to innovate their operational procedures post Covid-19, including an increased use of telemedicine. It expects that there will be an accelerated closure of tertiary assets whilst due to increased smart specifications necessary for future new build care homes, the cost of raw materials will further increase.

 

 

 

Fusion

 

 

QCS