Care Home Construction Market Report – UK 2021-2025

AMA Research has published the 6th edition of its Care Home Construction Market report, which contains an in-depth analysis of current and future building activity in the residential and nursing care home market, including both private and not-for-profit sectors.

 

 

 

 

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AMA Research has published the 6th edition of its Care Home Construction Market report, which contains an in-depth analysis of current and future building activity in the residential and nursing care home market, including both private and not-for-profit sectors.

Key Issues Covered in the Report

  • Market analysis & drivers – structure and size of the existing care home market, population and health trends, impact of Covid-19 and review of emerging sectors (e.g. extra care facilities).
  • Contracts awarded and pipeline – review of planning applications for 2020, as well as forthcoming pipeline of development by region.
  • Industry supply – in-depth review of private and voluntary/not-for-profit care home operators, as well as relevant building contractors.

Some of the companies featured in this report:

Lawrence Baker, HC-One, Advinia Health Care, Maria Mallaband Care Group, Seddon Construction,  Inspired Villages, Audley Group, Rangeford Holdings Ltd, Choice Care Ltd, Churchill Retirement Living, Rainier Developments, Redrow Homes Ltd, Thames Health Campus, Frontier Estates Ltd, LNT Care Developments, McCarthy & Stone Retirement Lifestyles Ltd, Castleoak Care Developments Ltd, Bryant Services Inc., Castlehaven Care Ltd, Prime Life Ltd , Perseus Land & Developments Ltd, Tanglewood Health Care, Private Medicare Ltd, Tamar Care Home Society, Salix Homes, Applethwaite Homes, Morrison Community Care, Cinnamon Retirement Living, Grosvenor Estate Belgravia, Allerton Group, Aspire Housing Ltd, Haigh Developments Ltd, Padda Care Ltd,

Areas of Particular Interest

  • Healthcare construction – new work and RMI levels within the healthcare sector for 2016-2025, as well as contractor developments and government investment plans.
  • Planning applications and contracts – overall number and regional segmentation, as well as existing pipeline and investment and development plans.
  • Care home costs and funding – review of existing models of finance, analysis of major operational costs and private/public sector funding.

KEY AREAS COVERED IN THE REPORT

Market Overview

  • Overview of care homes market size by value, number of care homes and bed spaces
  • Recent market performance – openings, closures, resident population, impact on the market of Covid-19.
  • Factors underpinning demand – UK demographic trends, growing prevalence of dementia and need for more specialist outlets.
  • Market polarization – growing gap between self-pay market and fees paid by local authorities.

Construction & Funding

  • Construction – new work output and RMI for healthcare between 2016-2025.
  • Care home development pipeline – planning applications, recent contracts awarded, regional pipeline of activity.
  • Greater private investment, proposed government changes to social care funding, growing costs for care home operators.

Market Prospects

  • Forthcoming changes to UK care home stock – projected expansion rates, regional growth areas and hotspots, changes in unit sizes and prospects for private vs public sectors.
  • Design trends – incorporation of more amenities and facilities, larger and more spacious care homes, greater utilization of digital technology.
  • Extra care sector – anticipated growth of this sector, development opportunities and potential increase in capacity.

Supply and Distribution

  • Major care home operators – private/independent operators and voluntary organizations, including information on recent projects/developments, financial results and corporate and market activity.
  • Private financing and investment funds – analysis of investors in the care home industry, such as private equity firms, hedge fund operators, real estate companies, etc.
  • Key building contractors – major players active in the care home construction industry, including information on recent projects won/completed, corporate activity and financial performance.

Until 2020, the UK care home market demonstrated some of the highest levels of construction activity within the healthcare industry, due to the country’s ageing population and the corresponding growth in demand for bed spaces. Much of the growth within the industry was driven by the rapid expansion of the private/self-pay market, which resulted in increasing number of premium care homes offering a wider range of amenities and facilities, as well as attracting the attention of many private sources of investment.

However, the industry experienced a turbulent period during 2020 as the Covid-19 pandemic struck the UK. With mortality rates especially high amongst care home residents and the older age groups in general, occupancy levels fell during the year and the high demand for bed spaces has been temporarily eased. Many care homes came under increased financial pressure as costs increased – for example, to purchase personal protective equipment (PPE) or to cover for absent staff either sick or self-isolating. The lessons learned from dealing with Covid-19 may prompt the government to hasten its long-delayed reforms into how social care is funded.

In the longer-term, underlying demographic trends mean the demand for additional capacity within the care home market is likely to start rising again within the next couple of years. Covid-19 is likely to drive the growth in demand for larger and better-equipped care homes, as well as accelerating the adoption of digital technology throughout the industry to enable operators to function more efficiently. The pipeline for future development remains relatively strong – especially in parts of the UK such as the South East – while the next few years are expected to witness a growth in the number of alternatives to care homes, such as extra care facilities and retirement villages.

CONTENTS

RESEARCH SERVICES OFFERED BY AMA RESEARCH 3
1. INTRODUCTION 9
1.1 BACKGROUND 9
1.2 SOURCES OF INFORMATION 9
2. SUMMARY AND MARKET PROSPECTS 11
2.1 SUMMARY 11
2.2 MARKET PROSPECTS 14
3. CARE HOME & HEALTHCARE CONSTRUCTION MARKET 17
3.1 OVERALL CONSTRUCTION OUTPUT 17
3.1.1 Total Construction Output to 2025 17
3.2 CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR 20
3.2.1 Outlook for Healthcare Construction Work to 2025 22
3.2.2 RMI in the Healthcare Sector 24
3.3 BUILDING PROGRAMMES AND INVESTMENT IN THE CARE HOME SECTOR 26
3.4 CARE HOME DEVELOPMENT PIPELINE 28
3.4.1 Planning Applications 28
3.4.2 Care Home Construction Contracts 30
3.4.3 Care Home Planning Pipeline 32
3.5 REGIONAL CARE HOME DEVELOPMENT PIPELINE ANALYSIS 33
3.5.1 Development Hotspots 35
3.5.2 South East 36
3.5.3 East England 38
3.5.4 West Midlands 39
3.5.5 East Midlands 41
3.5.6 Yorkshire & Humber 43
3.5.7 South West 44
3.5.8 North West 46
3.5.9 Scotland 48
3.5.10 London 50
3.5.11 North East 51
3.5.12 Wales 52
3.6 BUILDING PROGRAMMES OF LEADING CARE PROVIDERS 54
3.6.1 Market Activity 54
4. THE LONG-TERM CARE SECTOR IN THE UK 55
4.1 SECTOR DEFINITION 55
4.2 SECTOR OVERVIEW AND VALUE 55
4.2.1 Outlook for the Sector 58
4.3 SECTOR SIZE AND STRUCTURE 59
4.4 SUPPLY AND DEMAND IN THE CARE SECTOR 61
4.4.1 UK Provision 61
4.4.2 Regional Provision of Care Homes 63
4.4.3 Future Drivers of Demand 65
4.4.4 Care Costs 68
4.5 THE ‘EXTRA CARE’ HOUSING SECTOR 69
4.5.1 Overview 69
4.5.2 Funding for Extra Care Housing 73
4.6 THE INDEPENDENT LONG-TERM CARE SECTOR 75
4.6.1 Sector Value and Size 75
4.6.2 Leading Independent Care Providers 76
4.6.3 Private Care Home Financing and Investment Funds 84
4.7 THE LOCAL AUTHORITY/VOLUNTARY CARE SECTOR 87
4.7.1 Structure and Size 87
4.7.2 Leading Voluntary Care Providers 88
4.8 FUNDING FOR THE LONG-TERM CARE SECTOR 93
4.8.1 Social Care Spending 93
5. CARE HOME STOCK AND CONSTRUCTION ISSUES IN THE LONG-TERM CARE SECTOR 95
5.1 AGE & CONDITION OF CARE HOME STOCK IN THE UK 95
5.2 CARE HOME COSTS 96
5.3 CARE HOME SIZE AND CATEGORIES 98
5.4 CARE HOME DESIGN CONSIDERATIONS 100
6. CONSTRUCTION MARKET SUPPLY LONG-TERM CARE SECTOR 104
6.1 LEADING CONTRACTORS & DEVELOPERS IN THE CARE HOME SECTOR 104
6.1.1 Top Contractors by Care Home Awards 104
6.2 LEADING CONTRACTOR PROFILES 107
6.3 OTHER COMPANY PROFILES 115
APPENDICES 120
APPENDIX A: ECONOMIC ENVIRONMENT 120
A.1 OVERVIEW AND OUTLOOK 120
A.2 GDP 120
A.3 INFLATION & INTEREST RATES 122
A.4 EMPLOYMENT & WAGES 122
A.5 HOUSEHOLD CONSUMPTION 123
A.6 STERLING 124
A.7 TRADE & BUSINESS INVESTMENT 125

TABLES & CHARTS

CHART 1: CARE HOME CONTRACT AWARDS Q4 2018 – Q4 2020 BY VALUE (£M) AND NUMBER OF CONTRACTS (PROJECTS >£1M) 12
CHART 2: OUTPUT – NON-RESIDENTIAL CONSTRUCTION BY SECTOR (GB) 2016 TO 2025 – BY VALUE (£BILLION AT CURRENT PRICES) 18
CHART 3: CONSTRUCTION OUTPUT BY SECTOR 2020 20
TABLE 4: CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR (PUBLIC & PRIVATE) 2016-2020 (£M) 21
CHART 5: HEALTHCARE CONSTRUCTION OUTPUT 2016 – 2025: BY VALUE (£BN AT CURRENT PRICES) 22
TABLE 6: HEALTHCARE RMI MARKET 2016-2025 (£M) 25
CHART 7: CARE HOME PLANNING APPLICATIONS BY NUMBER AND VALUE (£M) Q4 2018 – Q4 2020 29
CHART 8: CARE HOME PLANNING APPLICATIONS 2020 BY REGION 30
CHART 9: CONTRACT AWARDS Q4 2018 – Q4 2020 BY VALUE (£M) AND NUMBER OF CONTRACTS (PROJECTS > £1M) 31
TABLE 10: CARE HOMES – CONTRACTS AWARDED BY REGION; VALUE AND NO. BEDSPACES: (PROJECTS > £1M) 2020 32
CHART 11: VALUE OF THE UK CARE HOME DEVELOPMENT PIPELINE 2021-2025 BY REGION (%) 34
CHART 12: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY REGION: BY NUMBER OF BEDSPACES 35
TABLE 13: SOUTH EAST: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 37
TABLE 14: EAST ENGLAND: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 39
TABLE 15: WEST MIDLANDS: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 40
TABLE 16: EAST MIDLANDS: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 42
TABLE 17: YORKSHIRE & HUMBER: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 44
TABLE 18: SOUTH WEST: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 45
TABLE 19: NORTH WEST: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 47
TABLE 20: SCOTLAND: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 49
TABLE 21: LONDON: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 (BY VALUE OF PROJECTS AND NUMBER OF BEDSPACES) 50
TABLE 22: NORTH EAST: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 52
TABLE 23: WALES: CARE HOME CONTRACTS IN THE PIPELINE 2021-2025 BY COUNTY (BY NUMBER OF NEW BEDSPACES) 53
TABLE 24 TOP 10 PROVIDERS OF LONG-TERM CARE BY NO OF HOMES AND BEDSPACES 2021-2025 54
CHART 25: UK CARE HOME MARKET – SECTOR REVENUE (INDEPENDENT/PUBLIC SECTOR) BY % SHARE 2020 56
TABLE 26: UK LONG-TERM CARE MARKET BY OWNERSHIP TYPE – NUMBER OF CARE HOMES/BED SPACE 2018 AND 2020 60
CHART 27: NUMBER OF CARE HOME RESIDENTS 2010 – 2020 (‘000) 62
CHART 28: NUMBER OF CARE HOMES (ALL TYPES) IN THE UK BY REGION 2020 63
CHART 29: NUMBER OF BEDSPACES IN CARE HOMES (ALL TYPES) IN THE UK BY REGION 2020 64
CHART 30: PROJECTED INCREASE IN UK POPULATION IN AGE GROUPS (65-74; 75-84; 85+); NUMBER OF PEOPLE; 2018 – 2083 66
CHART 31: EXTRA CARE/HOUSING WITH CARE MARKET: NO. UNITS 2010-2020 (‘000) 72
TABLE 32: EXTRA CARE HOUSING – LEADING PROVIDERS BY NO. UNITS 2020-21 73
CHART 33: PRIVATE LONG-TERM ADULT CARE MARKET BY VALUE 2015-2025 (£BN) 75
TABLE 34: LEADING 20 PRIVATE PROVIDERS OF LONG-TERM CARE BY NUMBER OF HOMES AND BEDSPACES, 2020 78
CHART 35 NURSING & RESIDENTIAL CARE HOMES BY OWNERSHIP TYPE (%) 2010-2020 87
TABLE 36: LEADING 20 VOLUNTARY SECTOR PROVIDERS OF LONG-TERM CARE BY NUMBER OF HOMES AND BEDSPACES, 2020 89
CHART 37: INDEPENDENT CARE HOME STOCK BY AGE OF BUILDING 2020 95
CHART 38: CARE HOME OPERATING COSTS AS A % OF TOTAL REVENUE 2018/2019 98
TABLE 39: DESIGN CHANGES IN NEW BUILD CARE HOMES 99
TABLE 40: TOP 20 CONTRACTORS & DEVELOPERS IN THE CARE HOME SECTOR – BY CONTRACTS AWARDED; NUMBER, VALUE (£M), SIZE; OCT 2018 – DEC 2020 105
CHART A1: GVA CHAINED VOLUME MEASURES, 2016-2021, KEY CONSTITUENT ELEMENTS 121
CHART A2: CPI INFLATION AND BANK OF ENGLAND BASE RATE, 2008-2023 122
CHART A3: AVERAGE WEEKLY EARNINGS DATA – GB – TOTAL PAY – 2014-2019 (SEASONALLY ADJUSTED) 123
CHART A4: DI PER CAPITA & SAVINGS RATIO AT CURRENT PRICES 2008-2023 124
CHART A5: EXCHANGE RATE FLUCTUATIONS 2015-2019, STERLING TO THE DOLLAR AND THE EURO, SPOT RATES 125
CHART A6: TRADE & BUSINESS INVESTMENT, 2019-2020 126


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