BUILDING FOR THE FUTURE
As demand for nursing home places currently outweighs supply, AMA Research presents its latest report on the care homes construction market along with most popular flooring specifications.
OVERVIEW There are now almost 19,000 care homes, nursing homes and residential homes providing adult and elderly care throughout the UK, of which the majority are operated by the independent sector or voluntary organisations.
THE CARE HOME SECTOR There have been many changes in the care home market over the last few years affecting longer-term trends in supply and demand. Whilst an ageing population and rising levels of disability and dependency among older people has increased demand for care home places, the growth in domiciliary care and stricter entry criteria by local authorities has reduced the supply of care home places, especially in that sector.
The most significant change in the provision of residential care in the last 25 years has been the much greater involvement of the private sector, with a substantial growth in the number of mainly privately provided nursing home places replacing large numbers of NHS hospital beds for both geriatric and mental illness care. More than 75% of all care homes and over 80% of care beds in England are now operated by the private sector, with NHS operated beds accounting for only 1% of total provision. This represents a significant rise since 2010.
The following chart shows an estimate of the mix of both residential and nursing care homes and bed-spaces provided by each type of organisation in 2017:
The market is characterised by increasing and acute supply and demand pressures, with an annual reduction in existing care home beds and a smaller number of newly registered homes, having resulted in a net bed reduction in a number of areas. Reasons for the current overall shortage of bed spaces include the decline in public sector provision, while private sector building is failing to meet demand.
A number of significant challenges are facing the care homes sector at present, with staffing and payroll issues a major concern. The introduction of the National Living Wage in April 2016 has led to increased payroll costs and reduced profit margins at a time when many care home operators already faced staff recruitment and retention problems, also being exacerbated by uncertainty over freedom of movement following Brexit.
In terms of provision, the private care home market in the UK is highly fragmented with several key players, but a large number of small providers. There are currently around 9,500 providers of care homes in the UK, of which almost 80% own just one home. In the local authority sector, there has been a significant drop in the number of available places, as government austerity measures have impacted local authority budgets.
CARE HOMES CONSTRUCTION In terms of development, there has been significant activity in new and emerging areas of the care market, particularly care villages and extra care schemes. The care home market has become highly polarised in recent years with developers continuing to focus on locations which are characterised by a strong self-pay market where higher fees provide investors with a stronger return on capital.
Source: CQC/AMA Research 24 | CARE FACILITIES
As such, new care home developments will be largely led by the availability of land. However, developers are facing increasing competition for land from alternative uses such as housing, student accommodation and hotels, particularly in
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