In its latest Business Outlook 2019: Navigate, Innovate, Accelerate report, care home property advisor Christie and Co revealed that the number of care homes in the UK has fallen by 2.1%, as smaller care homes are being squeezed out of the market.

According to the property advisor, smaller care homes have been unable to compete with an increasing number of global investors, despite the fact that the number of beds rose by 2% between 2016 and 2018.

Christie and Co Managing Director for Care, Richard Lunn, explained: “Significant corporate development activity has put pressure on some smaller operators, as regulators and operators focus on the quality of operations as well as the physical environment.

“Diverse global capital providers now consider healthcare a favourable investment class, generating a greater range of buyers and investors than ever before. Previously defined by entrepreneurial individuals and family run businesses with traditional debt, the market now sees capital from private equity providers, international real estate, and infrastructure funds, amongst others.”

The southeast of England still dominates the market as care home location and population of the area continue to affect the value and performance of a care setting.

Richard Lunn clarified: “Many other regions still have an undersupply of market standard beds and competition is most relevant on a localised market basis, as operators predominantly focus on building in locations with more self-funded residents rather than those reliant on local authority fees.”

Key challenges for care providers include staffing, funding and a tougher regulatory environment. The property advisor’s Adult Social Care 2018 report highlighted a deficit of 20,000 nurses currently in the UK, and a 13% drop in nurse registrations in 2018. It said that since the Brexit vote, there has been an 87% drop in EU nurse registrations since 2016, and the latest research shows the shortage of nurses is continuing to increase. Care home providers are now having to source more overseas nurses while using other strategies, such as upskilling care assistants to assist with basic nursing duties.

Christie and Co Managing Director for Healthcare, Michael Hodges, added that Brexit may also lead to a rise in the cost of materials and it may impact on the overall market confidence particularly in terms of investors.

The full report is available at www.christie.com.

Last reviewed 24 January 2019