The care market has continued to consolidate in 2018 amidst rising investor interest, Christie & Co has reported.
In its Business Outlook 2019 report, the specialist business property advisor said the number of beds rose by 2% between 2016 and 2018 despite a 2.1% drop in the number of homes. Average prices rose by 3.1% in 2018, the slowest rate of growth in five years.
Richard Lunn, managing director for Care, said the movement reflected a “shift in market standards, where smaller, movable assets are closing and being replaced with larger, new build developments which provide greater economies of scale”.
Christie & Co reported rising competition for prime sites with significant corporate developments putting pressure on some smaller operators as operators and regulators 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,” Richard said.
The report cited growing interest from private equity providers, international real estate and infrastructure funds.
Development continued to be focused primarily in the south east as providers focused on the private pay market in the year. Christie & Co said other regions of the country continued to see an undersupply of market standard homes.
Staffing, funding and a tougher regulatory environment were cited as the main challenges for operators who faced a 20,000 nursing shortage and a 13% drop in nurse registrations in 2018.
Agency staffing was sighted as another challenge for operators who have sought to offset their costs with higher fees.
The report stated that Brexit was unlikely to have a substantial impact on the market, although it could exacerbate staffing challenges.
Christie & Co forecast the sale of a major operating company this year along with the continuing consolidation of quality providers.