UK care home operators have reported a 5% growth in occupancy levels, strong demand for beds and increased profitability as the sector recovers from the pandemic.
The figure comes from global property adviser Knight Frank’s 2022 UK Care Homes Trading Performance Review, which collected data from around 79% of the corporate market operators with over 100,000 beds across 781 towns and cities.
Certain homes are already trading at pre-pandemic levels, occupancy rates are up to 84.3% from last year’s 79.4%, while average weekly fees are up by 3.3% to £980 (€1.135) per week.
Sector-wide earnings before interest, taxes, depreciation, amortization, rent, and management fees have increased from 26.2% to 26.3% proving the sector’s strong underlying fundamentals and resilience.
Julian Evans, head of healthcare at Knight Frank, said: ‘Despite further economic turbulence, we’ve seen further evidence of the resilience of the sector as proved by rising occupancy rates and stabilising profit margins. However, it would be remiss not to acknowledge the potential headwinds due to inflationary pressures with rising energy costs, the cost-of-living crisis and staffing shortages and what extent average weekly fees can increase in line with these costs to ensure that the sector is best positioned to absorb these. There is no doubt that support from the government, local authorities and regulators is crucial in these challenging times and whilst we do remain optimistic on its outlook, the sector will be leaning on a combination of its operators, investors, developers, lenders, and local government to maintain its resilience through the next 12-24 months.’
The Review highlighted the importance of government and regulatory support in both the long and short-term term for the sector.
Knight Frank expects that increasing emphasis will be placed on how government intervention will be able to limit cost growth of utilities in care homes which are around £58.000 (€67.180) annually, as property costs and food costs have experienced cumulative rises of 40% and 15% respectively.
Homes with an ‘inadequate’ CQC rating traded at a margin of 22% compared to 34% for homes with an ‘outstanding’ rating, while the most profitable size range are homes of between 60 to 100 which trade at approximately 29%.
According to current projections, the growth of UK’s elderly population could double the demand for care beds by 2050, increasing by 350,000 beds.
However, care home closures and the growing elderly population mean that supply is failing to keep pace with demand, with the UK elderly care market at risk of reaching capacity by the end of the decade.
