Knight Frank predicts further care home closures

The care home sector is facing a national crisis, due in part to a net loss in UK care homes and beds with further closures all but inevitable, according to the latest research from Knight Frank.

However, the crisis and imbalance of demand outstripping supply has driven increased investor appetite, as it becomes clear that there is a need for future-proof new build care facilities, meaning that there still remains a significant opportunity for developers and investors to capitalise.

Knight Frank’s ‘UK Healthcare Development Opportunities 2017’ report has identified a decrease in the number of registrations of both new homes and new beds, which, combined with the long-term trend of increased de-registrations, caused a net loss of 166 homes and 2,612 beds across the UK market in the 12 months to September 2016, with bed losses most severe in Greater London.

In this period there were 106 new care home registrations, bringing 5,497 new beds to the market which is a decline on 2015 where the market saw 119 new registrations and 5,805 beds. One factor to mitigate against this decline is that the average size of a newly registered care home has increased, implying that the growing need for bed capacity will be met through larger homes.

Julian Evans, head of healthcare at Knight Frank, commented: “The UK care market is facing an imminent crisis as the sector struggles to cope with a national shortage of beds. Our research suggests that if de-registrations continue to exceed the number of new registrations that come to market, approximately 6,000 beds are at risk of closure over the next five years.

“But this disparity of care bed supply and demand presents increasing opportunities for investors, and combined with the fall in sterling has generated a truly global appetite for the sector, with the care home sector likely to be the stand out asset class of 2017, particularly for those investors wishing to diversify their asset portfolios in the current uncertain economic climate.”

Knight Frank predicts that the trend of bed shortfalls will continue as the UK enters a new period of uncertainty following the Brexit vote with factors such as an acute shortage of nurses and rising staff costs due to factors such as the National Living Wage forcing the closure of unviable care homes.  

Nevertheless, this erosion of supply, coupled with the UK’s rising ageing population which is forecast to rise from 11.6 million in 2016 to 12.9 million by 2021, will spark development interest, despite emerging headwinds, leading to further opportunities for investors.

In 2016 there were locational differences in the best future prospects for care home investment and development, with South Glamorgan overtaking Greater London to take the top spot in the 2016 Care Home Development Index, despite the southern regions of the UK continuing to offer the most active development pipeline.

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  1. SClift

    It is not really rocket science to work out why care homes are closing and knowing full well that by the time CQC raise there prices, good practice organisations such as Gold Standard frame work rise theirs, the NLW raise for 1st level care and care support workers is implemented which will lead to senior carers and such wage increase and then the nurses who we already cannot attract receive their increase just to try and keep them, and then managers who generally have only had pay rises in the past 5 years to the post in-order to attract managers in (not as an annual performance increment) to a role of over responsibility and major blame culture (I am luck with the company I work for at present who actually appear to value their managers for the first time in a very long time, I may not receive a pay increase but I do feel valued and not many managers can say that in this business), but once all that is done homes wont be able to afford to run much longer . After all we need the increase of finance by way of fees to make these pay increases and meet the rising costs of food, fuel etc. because they are also passing on the change in wages and so on.Then there are the changes in standards imposed by CQC and H&S. If there is any money coming our way via the government directly and not just to the NHS/CCG/Social service who are too busy trying to make the other pay but still get more for themselves, and no one has come up with the stupid idea of spending it on supporting some good cause abroad care Homes may have a FIGHTING CHANCE. Alternative ways to save money change the policy to stop us having to through away millions of pounds worth of drugs each week across the county, collect repair and reuse equipment that is left and thrown away as care homes or peoples homes have no-where to put them and no use for them, initiate a voluntary work scheme for the unemployed to gain experience and hands on training in care homes this will increase staff on the floor, reduce risks such as falls and loneliness, corners being cut due to lack of time to meet peoples needs properly and enhance the daily living of the people we owe the most too, and give us a work force that can take over in permanent positions when roles occur, bring back proper job centres people need to interact and have support which will help to reduce fraudulent claims. Caring for people is not every ones cup of tea but floors need to be cleaned , draws need to be fixed, gardens tended ,bills sent out and food prepared cooked and served people entertained and council-ed, driven to appointments . There are plenty of jobs and it would probably cost the government no more that the apprenticeship scheme’s for younger people but support , educate and train a lot more and create a skilled workforce with a scene of purpose it does not just have to be in care homes it could apply to any business including politicians ~ just an idea

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