UK care home industry facing ‘unprecedented crisis,” says Knight Frank


Julian Evans, Head of Healthcare, Knight Frank

The UK care home industry is facing an “unprecedented crisis” amidst rising demand from the ageing demographic, according to leading global property adviser Knight Frank.

Knight Frank said care home occupancy levels were at record levels of 89.4% following six years of growth with 267 homes and 6,028 beds lost during the first half of 2018.

Julian Evans, Head of Hotels and Healthcare at Knight Frank, said: “The care home industry desperately needs new facilities to be developed and built otherwise we are going to see a crisis in care in the next few years. Investors are out there but developers need to build as the lack of available stock is the biggest barrier as opposed to a lack of investor appetite.”

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Knight Frank said average fees had outstripped inflation for the fifth consecutive year as operators looked to limit the impact of rising staff costs and generate the additional income required to invest in and improve the quality of care they provide.

Julian added: “We estimate that we require in excess of £15bn to upgrade existing beds in order to future-proof and that approximately 6,500 care homes are at risk of closure over the next five years, which equates to 140,000 beds.”

Knight Frank said there had been a “clear change” in investors in the UK with US REITs accounting for only 6% of all major care home transactions since 2015, compared with 46% between 2013 and 2015. The property expect said Asia Pacific and infrastructure funds were now leading investment.

The property specialist cited ageing property stock and rising costs, including the impact of the National Living Wage, as among the main reasons for home closures.


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