South Glamorgan tops the hotspots list for England and Wales in a new report by Knight Frank, identifying which UK locations present the best prospects for care home investment and development.
According to the global property consultancy’s annual UK Care Home Development Index, South Glamorgan – comprising Cardiff and the Vale of Glamorgan – is experiencing strong economic growth but has limited levels of new supply despite the relatively cheap cost of land.
Forecasted population growth, levels of wealth, staff costs, land values and weekly fees were also taken into account.
Leah Mullin, head of residential development for Knight Frank in Cardiff said: “For these reasons, the region is expected to present attractive development opportunities. Cardiff and the Vale of Glamorgan are attractive to the care industry because of the proximity to the Capital City with its leisure and retail offering and Glamorgan which has a justified reputation for its sprawling countryside and beautiful heritage coast.
“There are a number of care homes currently under development in the area including Llys Isan at Llanishen where developer McCarthy and Stone is building 49 retirement units specifically targeted at the over 70s; Churchill Retirement Living’s De Clare Lodge in Cowbridge comprising 37 new retirement homes; Arbor Vale in Dinas Powys – Developer with Portabella constructing 24 properties for over 50’s; and the 70 bed care home recently completed at Castleoak Abergavenny.”
The top five hotspots in England and Wales are South Glamorgan, Greater London, Buckinghamshire, Wiltshire and Berkshire.
Overall, the UK care home market continues to grow at a lacklustre pace in terms of bed numbers, with the past year seeing a marginal net gain of only 43 beds combined with a net loss of 86 care homes, according to the Knight Frank research.
The annual UK Healthcare Development Opportunities 2019 research report showcases the trend that the number of new homes being built continues to be counterbalanced by the number of home closures. However this has not resulted in a loss of overall beds as typically smaller care homes have closed whilst larger, more efficient and viable schemes open throughout the UK and existing care homes are undergoing extensions and refurbishments.
Julian Evans, Head of Healthcare at Knight Frank, said: “With much of the UK’s existing care home stock outdated and elderly population growth expected to drive unprecedented levels of bed demand going forward, it is clear that more care homes need to be built. Though there was a marginal net gain of beds over the past year, this is still not enough to address the crisis in provision and is likely to be further exacerbated as the next generation requirements for care grows at a faster rate than new care homes can be developed.
“Our analysis shows that the UK is already short of 100,000 market-standard beds and this will worsen over the next two decades unless existing stock is upgraded and the rate of new builds increase.
“Owing to the scarcity of stock and ongoing demand, the investment appetite for new care home schemes remains strong and opportunities exists for both investors and developers, with our Hotspots Index highlighting the range of opportunities nationally.”
Care homes are closing owing to a variety of factors including the rise in the National Living Wage, which has further impinged on an already constrained labour market and ongoing staffing challenges including an acute shortage of qualified nurses. Many buildings are not fit for purpose and are failing care standards, with two-thirds of those closed rated ‘inadequate’ or ‘requires improvement’. This is compounded by the insufficient funding available for reinvestment into existing care homes, mixed with building material inflation costs and construction costs which have confined new care home development.