UK care homes remain attractive to investors despite the volatility that is brought upon by Brexit. In fact, it seems to be the sector that is least affected by the effects of the UK taking a step out of the European Union.
According to the review on Care Homes Trading Performance for 2018, care home occupancy rates are at such a record high. The numbers are at 89% and are actually in its sixth consecutive increase. It is further revealed that there has been an increase on the average weekly fees by 3.7%. This is the seventh consecutive rise in the sector with the figures now at £773. In addition, profitability is quite sound at 28.3%.
According to property specialist Experience Invest, the rise in the occupancy rates can be attributed to the increase in the overall life expectancy of the population. It is expected that demand is going to continue to rise too. This is especially true if one were to consider how the population of over 85 in the UK is going to double in just the next 23 years. If the predictions are correct, the number could total to 3.4 million.
While it is true that there are some operational challenges in the sector, it has also remained an investment that is highly attractive among interested parties. It is even the one sector that is least affected by the volatility that Brexit seems to have been causing to the rest of the country’s economy. After all, demand for this sector is actually being driven by domestic factors and not international ones.
The sector is quite remarkable due to its defensive characteristics. It is also able to provide investors with income for the long term along with the fundamental strength from the occupational market. These factors have made the sector quite an appealing choice among investors that are hoping to get their portfolios diversified.
Demand for beds in care homes still continues to outstrip the available supply too. In the last year alone, there were a total of 226 closures which totals to 6,740 beds. This happened due to increase in staff costs, which in the past year, has increased to 4.7%. This is considered a continuing impact of a labour market that is highly constrained, the National Livign Wage implementation, as well as the acute shortage of nurses that are qualified to work in these environments.
There is also the fact that a number of the buildings that were outfitted to become care homes were found out to be unfit for purpose. About 85% of the care homes in the country are already beyond 40 years old. Considering how there seems to be insufficient funds for the future-proofing and refurbishment of existing facilities, it can only be expected that demand will continue to rise.
It is further predicted that despite the rising costs and the uncertainty of the present economic conditions, care homes will still remain an asset class that will be compelling among investors, especially among those that hope to get their risk and returns duly balanced. Learn more about why care homes are attractive investment choices by reading about Experience Invest online.