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Britain’s care time bomb ‘one of the biggest commercial opportunities’ for private investors.

As publicly funded care providers struggle with the introduction of the National Living Wage, Britain’s Health Secretary believes that this provides a tremendous opportunity for private care home investments.

While Mr Hunt acknowledged that challenges imposed by the living wage and the country’s rapidly ageing population would affect both the public and private sector alike, he also predicted that private, profit-seeking firms would be willing to fill the void; taking advantage of the sector’s  increasingly sustainable demand stream and significant potential for profit.

Current funding sources of the UK care home investment market.

The care home sector is already seeing substantial levels of private investment. According to CBRE UK, the UK healthcare market saw over £4.5bn worth of deals in 2014, and continues to provide private investors with a sustainable property investment asset class. The sector has also received substantial support from banks and lenders, based primarily on the country’s rapidly ageing population providing a stable demand for the sector’s services.

According to the IPD’s Healthcare Index, healthcare property outperforms all other UK commercial property assets, with total returns increasing 3.4% 2013-2014, compared with an average increase of 1.5% across all UK property. This highlights the profitability and security of the sector and supports Mr Hunt’s labelling of care home investments as ‘one of the biggest commercial opportunities’ in the UK.

While the privatisation of the UK care sector is good news for private investors, it is also good news for those dependent on the sector’s services. According to a recent report by Knight Frank, up to 80% of the UK’s care home stock is considered to be ‘below institutional quality, while the most recent NHS planning report  also acknowledged significant failings in the quality of care being provided in the UK. Within a competitive private market, care providers will be forced to compete on the standards of care they provide and the facilities they offer; combating the complacency which led to the sector’s previously substandard levels of care.

Read more about The gap in the quality of care in the UK.

This competition is accompanied by the government’s pledge to improve scrutiny of the sector’s services. The Health Secretary hinted that increased inspection of the sector could serve to drive out rogue service providers. He said: "If there are people who are exiting the market because they don't like the much greater scrutiny over standards of care, then that's their choice - but I think it's the right thing for us as a society.”

If you are interested in taking advantage of one of the UK’s biggest commercial investment opportunities, call a member of our team today on +44 (0)1202 765011 or email [email protected] for more information.


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