2025-03-18-莱坊-Healthcare_Development_Opportunities_2025_16页_4mb

Healthcare Sector Summary: 2025 UK Care Home Supply and Development Opportunities

Core Content

The UK healthcare sector, particularly the elderly care home market, is experiencing a growing demand due to an ageing population and the need for improved care facilities. Despite this, the supply of care homes has not kept pace with demand, leading to a potential deficit in the coming years.

Key Trends and Statistics

• Supply Growth:

  • Total bed supply has increased by only 86 beds since the last analysis.
  • Over the last decade, bed supply has grown by 2.9%, while the over-65 population has grown by 20.7%.
  • Deregistrations have continued, with a 1.3% leakage of supply over the past 12 months.

• Existing Stock:

  • 76% of care homes are over 20 years old.
  • 29% of beds lack en suite facilities, and 70% lack full wet rooms.
  • 27% of homes are converted from other uses and may be outdated.
  • 19% of homes are rated "requires improvement" or "inadequate" by the CQC.

• New Builds:

  • In 2024, new care home completions dropped by 36% compared to 2023.
  • There were 17% more planning schemes in 2024, suggesting a promising pipeline.
  • The Midlands (East and West) have seen the most new beds regionally.

Development Hotspots Index

• Index Overview:

  • The index evaluates counties in England, Wales, and Scotland based on eight variables: demographic and economic projections, wealth, future supply pipeline, land values, and operational performance.
  • Cambridgeshire and South Glamorgan are the top counties in England and Wales, respectively.
  • London no longer ranks in the top five due to its fragmented land values.

• Key Rankings:

  • Cambridgeshire: Total score index 1.32
  • South Glamorgan: Total score index 1.52
  • Lothian: Total score index 1.23
  • Greater Manchester: Total score index 1.24
  • Tyne & Wear: Total score index 0.98

Demand for Care

• Occupancy and Fill Rates:

  • New care homes typically take 2 years to reach full occupancy.
  • High-quality sites may achieve full occupancy in 18 months, while others may take 4 years.
  • 26.7 beds per 100 people over 85 is the average supply.

• Care Usage Multipliers:

  • People over 85 account for 13.5% of the over-65 population but 51% of care demand.
  • This highlights the importance of targeting high-quality, future-proof care homes.

Key Insights from Freddie Richards

• Supply Shortfall:

  • The sector is not building enough new homes to meet demand.
  • Existing stock is often outdated and unsafe, necessitating more new developments.

• Home Sizing:

  • The sweet spot is between 60 and 80 beds, though smaller and larger homes can also be viable.
  • Europe often has larger homes, but the UK market favors mid-sized facilities.

• Operator Preferences:

  • Strong commissioning teams are preferred for new developments.
  • Operators with experience in forward funding and pre-let deals are particularly valuable.

• ESG Considerations:

  • The sector is strong in Social aspects but lags in Environmental performance.
  • There is a need to focus on biodiversity net gain and Scope Three emissions reporting.

• Site Selection:

  • Key factors include population density, staff availability, and competition.
  • A strong operator can overcome site limitations.

• Debt and Funding:

  • While the cost of debt impacts development viability, the sector is seeing more innovative funding options.
  • Low gearing among investors means the market is more accessible.

• Retention of Older Homes:

  • There is potential to refurbish and extend older assets to support supply growth.
  • However, smaller homes are unlikely to deliver quality care and should be phased out.

• Future Projections:

  • By 2050, the UK is expected to face a shortfall of around 200,000 beds.
  • En suite beds are already in deficit, with a significant portion of current stock lacking these features.

Conclusion

• The UK care home market is at a critical juncture, with a growing demand and limited supply.
• A combination of new developments and refurbishment of existing stock is essential to address the supply gap.
• Cambridgeshire and South Glamorgan are highlighted as the most promising regions for new care home development.
• The sector must adapt to ESG requirements and focus on future-proof design to meet the needs of an ageing population.