Supply of beds in the UK care market fell for the first time by 177, with an expected shortfall of more than 200,000 by 2050, according to Knight Frank.
Its Healthcare Development Opportunities report found the market consists of older, converted stock that, in some cases, may be considered ‘obsolete’. This is due to size and lack of en suite or full wetroom facilities, which provides an opportunity to those willing to repurpose and reposition supply, it said.
‘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,’ the report said. ‘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 bed supply has risen 2.7% over the last decade, the over-65 population has grown by 19% over the same period, it said.
Net gain and losses of beds by region from 2017/18 to 2022/23, showed the Midlands is attracting a higher number, while the South West and Yorkshire & the Humber are losing the most.
Last year saw a 15% dip in the number of new homes completed, but Knight Frank’s analysis said 2023 has been a ‘promising’ start, benefiting from delayed completion of properties that had been due to complete last year.
In 2022, approximately 10,000 beds were granted via planning application and represented a mix of refurbishment and extensions to existing stock as well as new-build schemes. Completion of these schemes will add to the 480,578 existing bed supply and 11,907 homes.
‘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,’ said Julian Evans, head of healthcare at Knight Frank.
Knight Frank’s development hotspots index provides insight into which locations offer the best prospects for care home development. The South East and East of England have seven of the 12 hotspots. ‘These counties tend to score well due to expected demand for care beds, indicated by high elderly population growth, economic growth and wealth – all of which are drivers of bed demand for self-funded residents,’ the report said.
The top five in England and Wales are South Glamorgan, Greater London, Buckinghamshire, Wiltshire, and Cambridgeshire. In Scotland, the top three are Lothian, Highlands and Islands, and Lanarkshire.
Within the last six months Knight Frank has transacted on almost £1bn of assets, with investors ranging from REITS, private equity, infrastructure, and APAC funds.