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6,000,000 Elderly Brits Will Require Care Homes by 2040

A recent report warned that, by 2040, the British elderly population in need of care will hit a critical 6 million.

The report was commissioned by the Department of Health and Social Care, and carried out by the London School of Economics, and York and Kent ­universities.

Britain’s elderly population is growing rapidly. In 25 years, the report projected that the number of those over 65 years of age will increase from 9.7 million to 14.9 million, a rise of more than half.

Those over 85 years of age are projected to rise even more rapidly, more than doubling from 1.3 million to 2.7 million.

Of the elderly population, those in need of care will shoot up to 5.9 million, an increase of almost 70% from the previous 3.5 million.

Growth of the UK’s elderly population and those in need of care by 2040. Source: ESHCRU, PSSRU

Report lead Raphael ­Wittenberg of the London School of Economics said: “Our projections of demand for social care show unless there is a substantial decline in disability rates in old age, the number of people needing care will rise greatly over the next 25 years.”

Public expenditure on social services is expected to balloon from £7.2 billion to £18.7 billion, which is more than two and a half times the amount spent in 2015.

The £9.4 billion in dedicated social care funding provided by the Department of Health and Social Care to local authorities over a three-year period, has been insufficient for the growing elderly population in need of care. Budget cuts have hit social care aid, and NHS figures showed those receiving help have fallen by 400,000 since 2010.

Barbara Keeley, Shadow Minister for Social Care said: “Councils who provide care are facing bankruptcy, nearly half a million fewer people are getting publicly funded care than in 2010 and over one million older people are going without any care at all.”

Ian Hudspeth, chairman of the Local Government Association’s Community Wellbeing Board said: “With people living longer, increases in costs and decreases in funding, adult social care is at breaking point.

“Adult social care services face a £3.5 billion funding gap by 2025 just to maintain existing standards of care. The likely consequences are more and more people being unable to get quality and reliable care and support,” he said.

The elderly that do not qualify for social care funding will have to pay out of their own pocket. Private expenditure is projected to rise from £6.3 billion in 2015 to £16.5 billion in 2040, an increase of 163%.

Yet, private care may not be that easy to obtain either. In May, CBRE reported that by 2021, there would be a shortfall of more than 148,000 beds at private care homes.

Currently, 85% of Britain’s care home stock is over 40 years old with half of the existing 480,000 care home beds not fit for purpose and 6,600 care homes at risk of closure over the next five years, due to poor condition.

For the elderly in need of care but are unable to obtain it, there is undue pressure on their family and friends to provide assistance for daily living. This is not sustainable — the fate of Britain’s elderly lies in whether the country can build enough care homes to ensure them a decent standard of living.

New-build care homes are currently being constructed across the country to meet this need. With low supply and high demand, this sector offers  lucrative opportunities for investors, providing high returns at low risk.

Care homes from several developers like Qualia and Carlauren are packaged to be accessible to investors. There is no need for a large amount of capital, with investors being able to purchase as little as just an individual room, which has the additional benefit of falling below the stamp duty threshold for commercial property. This brings great returns due to the savings on duty.

An investment in care homes goes beyond monetary gain, and provides a practical benefit for society — specifically the British elderly population in need of care.

Virata Thaivasigamony of CSI Properties knows this. He says: “What the elderly care homes investment extends to the investor — above other investments — is the fulfilment of having done something for the good of others. Yes, it is undoubtedly a profitable venture, but it is also an investment that adds value to society and truly makes a difference.”

This weekend in Singapore at the Hilton Hotel (Thailand & Singapore Room Level 5), attend the launch of Bayview, a UK care home in Morecambe Bay. Meet Carlauren CEO Sean Murray and find out how you can get 10% rental returns assured for 10 years, starting from a capital of £85,950! 

What are your thoughts about the elderly care crisis the UK is facing? Drop us a comment below. If you are interested to invest in UK Care Homes with the potential for high returns while making a difference, don’t hesitate to give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal

Sources:

  • http://eprints.lse.ac.uk/88376/1/Wittenberg_Adult%20Social%20Care_Published.pdf
  • https://www.mirror.co.uk/news/uk-news/elderly-care-timebomb-report-reveals-13256671
  • https://www.nursingtimes.net/news/number-of-older-people-needing-care-set-to-rise-to-12-million-by-2040/7026017.article
  • https://csiprop.com/uk-care-homes-vs-malaysian-property/
  • Featured Image: Orchid Care
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UK Commercial Care Homes VS Malaysian property

The returns from investing in the UK commercial care homes sector are undoubtedly attractive. But, beyond that, what this particular investment extends, above other investments, is the fulfilment of having played a part in providing care for those who need it.

Investor interest in the UK healthcare market reached historic highs this year.

By the end of May, investment volumes had hit £687bn – significantly higher than the £492bn invested in the same period last year and the £417bn reported in 2016.

Notable transactions in the first quarter of 2018 alone include Triple Point Social Housing REIT’s investment in supported housing worth more than £40m and Impact Healthcare REIT’s sale-and-leaseback deal on three purpose-built care homes operated by Prestige Care Group for £17m.

Healthcare investments in the UK from 2008 to 2018-to-date (Graphic: Propertyweek.com)

Healthcare is becoming an increasingly popular sector for investors. Results from CBRE’s recent EMEA Investor Survey show that healthcare is one of the most popular subsectors of the alternatives market, with large numbers of investors looking to get into the sector.

This is reflected in increased demand: in spite of healthcare staffing challenges arising from Brexit and a social care funding crisis, occupancy rates for UK care homes rose for the fifth consecutive year. Demand for the sector is now at its highest level in over 20 years, translating to a record volume of about £12bn healthcare deals in 2017, reports Knight Frank. It is anticipated that investment volumes in healthcare real estate will continue to grow thanks to strong investor demand for this sort of long-dated, fixed-income stock.

CBRE reports that the key factor underpinning the potential for future growth in the UK’s healthcare real estate sector is the need to accommodate the mounting care needs of the British aging population.

And, these needs are real, especially if one looks at the estimated shortfall of 148,777 market standard beds by 2021 coupled with 6,600 care homes at risk of closure over the next five years. Currently, 85% of care home stock in the UK is over 40 years old with half of the existing 480,000 care home beds not fit for purpose.

CBRE projects over-85s in Britain to grow by 50% to 2.28m in 2026, quadrupling to make up a total of 8.8% of the UK’s population by 2081.

Projection of UK elderly population growth to 2081 (Graphic: CBRE)

Dementia is a growing concern among the elderly as well, with a pressing need for specialist care to give sufferers an adequate standard of living. In the absence of a cure, the overall number of people in the UK with diagnosable dementia will treble to over 2.5 million by 2081.

In the care home sector alone, this growth will result in the need for an additional 200,000 specialist dementia beds over the next 25-30 years, representing an increase of 40% on current numbers.

Knight Frank Head of Healthcare, Julian Evans, said that investment was needed in the current market with demand outstripping supply.

He stressed that the care home sector was facing a “national crisis” of undersupply with 5,000 beds brought to the market last year and 7,000 beds being decommissioned.

Virata Thaivasigamony of property consultancy CSI Prop echoed the findings from CBRE’s Investor Survey, saying that there has been good response among Malaysian investors towards UK care homes.

“Our last few launches sold out quickly, but we are introducing more projects from this segment to meet the high demand that we have seen among Malaysian investors.”

But for him, there is more to the investment than monetary gains.

“What the elderly care homes investment extends to the investor — above other investments — is the fulfilment of having done something for the good of others. Yes, it is undoubtedly a profitable venture, but it is also an investment that adds value to society and truly makes a difference.

“Caring for the elderly and infirm, especially those with dementia, is not akin to caring for an elderly but, otherwise, relatively healthy mother or relative at home. It requires specialised care. It is enabling the elderly to have dignity in the last few years of life, providing them with the care that their children, family member and friends cannot provide for them,” Virata said.

UK Care Homes Vs Malaysian Property

There is good reason for the high investor demand. The comparison of investment yields below shows that UK care homes offer much higher returns compared to local residential property, with the added benefit of an easy exit:

Rental yields for a UK Care Home vs a Klang Valley Apartment. Note: Klang Valley prices and rental returns are estimates based on current market conditions.

At the moment, residential property in Malaysia is showing lacklustre demand among investors. The glut of unsold housing indicates that the local market is currently on a downward trend, which is driving investors to search of better returns elsewhere.

The number of unsold completed residential units for the first quarter of 2018 totalled 34,532 units, worth RM22.26bil, the National Property Information Centre reported in June.

This represents a 55.72% increase from the 22,175 unsold units last year.

In ringgit values, this represents a rise of 67.82% from last year’s RM13.27 bil.

What are your thoughts about the investors flocking to the Care Homes sector in the UK? Drop us a comment below. If you are interested to jump on the Care Homes bandwagon with the potential for high returns, don’t hesitate to give us a call at 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong

Sources:

  • https://www.propertyweek.com/analysis-and-data/uk-healthcare-investment-volumes-show-strong-growth/5097120.article
  • http://www.carehomeprofessional.com/exclusive-investor-interest-uk-care-home-market-historic-high-says-knight-frank/
  • https://www.thestar.com.my/business/business-news/2018/06/28/unsold-residential-soho-units-at-rm22bil/#qvbDmpmyyufsX23G.99
  • https://www.cbre.com/research-reports/United-Kingdom-Healthcare-Property-Trends-May-2018
  • http://valuedinsights.cbre.co.uk/the-property-perspective-alternatives-h1-2018
  • http://www.knightfrank.co.uk/resources/healthcare-property-spring-market-overview-2018-spring-2018-5204.pdf
  • Featured image from cygnet.care