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  4. > Care Homes Construction Market Report - UK 2015-2019 Analysis

AMA Research have published the 3rd edition of the 'Care Homes Construction Market Report – UK 2015-2019 Analysis'. This report should be of particular interest to care providers in the private and local authority sectors and construction/service companies involved in the long-term care sector.

Key issues covered:

Structure and size of both the independent and voluntary sectors.
Construction output and RMI in the healthcare and care homes sectors, with forecasts to 2019.
Analysis of supply and demand in the care sector against a backdrop of an ageing population.
Sources of funding and investment in the independent and voluntary care sectors.
Development pipeline - key building programmes and major players.

Key areas of insight include:

Review of private, public/voluntary provision – mix shares, values, trends in last decade, future prospects up to 2019.
Implications of bedspace shortages and funding of long-term care.
Analysis of long-term care homes development pipeline.
Detailed analysis of the development opportunities available to develop residential care property and the building programmes and expansion plans of leading independent and voluntary sector providers.
Review of key contractors / clients/ development programmes.
Some of the companies included:
Allenbuild, BAM, Bardsley Construction, Bouygues, Building Construction Partnership (BCP), Care UK, Castlemead, Castleoak, Galliford Try, Greswolde, Keepmoat, Leadbitter, LNT Construction, Morgan Ashurst, Stepnell, Wates, Willmott Dixon.

Key areas covered in the report include:

THE LONG-TERM CARE SECTOR IN THE UK

Sector value and market overview - sector size and structure – number of homes, residents, bedspaces 2004-2014, – split by provider (private, voluntary, LA, NHS) 1998-2015.
Funding for the long-term care sector - plans for adult social care funding reform under the Care Act – impact of delays.
Supply and demand in the care sector – regional provision of care homes beds and homes 2014/15, drivers of demand, population age profile up to 2080, future demand for care home places 2015-2020, size of new developments.
‘Extra-care’ housing sector – number of developments by region, scale of sector, £300m funding, key players etc.
Independent long-term care sector – sector size & value 2009-2019, leading 20 independent care providers – market shares, profiles, development plans etc, changes in market structure.
Local Authority/Voluntary care sector – sector size & value 2009-2019, leading 20 voluntary care providers – Housing Assocs, Voluntary – shares of leading providers.

CONSTRUCTION MARKET OVERVIEW

Value of output – construction new work - construction output in 2012 and beyond.
Construction output in the healthcare sector and forecasts for output 2015-19.
RMI in the healthcare & care homes sector – 2009-2019 by value. Age profile of care homes.
BUILDING PROGRAMMES AND INVESTMENT IN THE CARE HOMES SECTOR

Private healthcare investment – principal private care home funds – key operations, fund values etc.
Funding & ownership models in the care homes sector.
Mergers & acquisitions in the private long-term care sector – key recent changes.
Care home development pipeline – care home size and facilities, care homes planning applications by region (H1 2015), average sizes (2004-14).
Building programmes & expansion plans of leading care providers – key players in sector, key factors driving development programmes (land availability, demand, design standards etc).

CONSTRUCTION SUPPLY IN THE CARE HOMES SECTOR

Key construction companies and developers in the long-term care sector.
Contractor/Developer Profiles – Bouygues, Building Construction Partnership, Castlemead, Castleoak, Galliford Try, Keepmoat, Leadbitter, LNT, Stepnell, Thomas Vale, Wates, Willmott Dixon etc – key clients, development programmes, capabilities etc.The availability of good quality, purpose built care homes continues to outstrip supply, creating unprecedented levels of demand for new facilities. This factor, together with underlying demographics and major funding issues, is driving activity in the new-build care home sector with growth focused specifically in the ‘for profit’ sector. Care home capacity has increased over the last 5 years and total care home sector revenue has increased by an estimated 4.3% in 2014. There are now almost 20,000 care homes, nursing homes and residential homes providing adult and elderly care throughout the UK, of which the majority are operated by the independent sector or voluntary organisations, with the remainder NHS or local authority operated.

The private care home market in the UK is highly fragmented with several key players, but a large number of small providers - 80% of providers own just one care home. There has been a significant drop in the number of available places in local authority residential care homes, with government austerity measures impacting local authority budgets, combined with the economic climate contributing to difficulties currently experienced in the UK’s care home sector. The introduction of the new Living Wage legislation is also expected to further challenge the local authority care home sector as operational costs increase.

In England and Wales, demand for care home operators to build new facilities is still strong with many new care home registered during 2014. Nearly all new care home development currently taking place is targeted at private payers in affluent areas of the country such as the Southeast. As a result, care home investors and developers are now seeking sites and homes in these strong regional locations, although the rest of the UK is also seeing a growth in new build care homes. However, the competition for land, particularly from the residential development market is reducing the number of readily available opportunities, especially in the Southeast.

Despite considerable investment in new and refurbished capacity within the independent sector during the last 20 years, a considerable amount of existing care home stock is still classed as sub-standard. Further substantial investment in capacity will be required going forward as demand for care homes continues to rise in line with estimated rises in the elderly population and those with conditions requiring specialist care such as dementia. Demand for care home places is also expected to rise steadily over the next 5-10 years. It is estimated that at least an extra 6,700 net new places will be needed each year to 2020 to satisfy demand in both the public and private care home sectors.

Table Of Contents

Care Homes Construction Market Report - UK 2015-2019 Analysis

1. INTRODUCTION 7
2. SUMMARY AND FUTURE PROSPECTS 8
3. ECONOMIC ENVIRONMENT 13
3.1 GDP 13
3.2 INFLATION and INTEREST RATES 14
3.3 UNEMPLOYMENT 15
3.4 HOUSEHOLD CONSUMPTION 16
3.5 HOUSING and CONSTRUCTION 16
3.6 STERLING 17
3.7 POPULATION PROFILE 18
3.8 CONCLUSIONS 18
4. THE LONG TERM CARE SECTOR IN THE UK 20
4.1 SECTOR DEFINITION 20
4.2 SECTOR OVERVIEW AND VALUE 20
4.2.1 Outlook for the Sector 22
4.3 SECTOR SIZE AND STRUCTURE 22
4.3.1 Long Term Care for the Elderly 23
4.4 SUPPLY AND DEMAND IN THE CARE SECTOR 24
4.4.1 Future Demand for Care Home Places 25
4.4.2 Regional Provision of Care Homes 26
4.4.3 Future Drivers of Demand 29
4.5 THE ‘EXTRACARE' HOUSING SECTOR 31
4.5.1 Overview 31
4.5.2 Extra Care Developments 32
4.5.3 Funding for ExtraCare Housing 32
4.5.4 Planning Issues for ExtraCare Housing 34
4.6 FUNDING FOR THE LONG TERM CARE SECTOR 34
4.6.1 Social Care Spending 34
4.7 THE INDEPENDENT LONG TERM CARE SECTOR 36
4.7.1 Sector Value and Size 36
4.7.2 Leading Independent Care Providers 37
4.8 THE LOCAL AUTHORITY/VOLUNTARY CARE SECTOR 44
4.8.1 Overview and Sector Value 44
4.8.2 Structure and Size 44
4.8.3 Leading Voluntary Care Providers 45
5. CONSTRUCTION MARKET OVERVIEW 49
5.1 TOTAL CONSTRUCTION OUTPUT 49
5.1.1 Construction New Work - Value of Non-Domestic Output to 2019 49
5.2 CONSTRUCTION OUTPUT BY SECTOR TO 2019 50
5.3 CONSTRUCTION OUTPUT IN THE HEALTHCARE SECTOR 53
5.3.1 Healthcare Construction Output - Forecasts to 2019 54
5.3.2. RMI in the Healthcare/Care Home Sector 55
5.4 PRIVATE HEALTHCARE INVESTMENT 60
5.4.1 Principal Private Care Home Funds 60
5.4.2 Mergers and Acquisitions in the Private Long-Term Care Sector 61
5.5 BUILDING PROGRAMMES AND INVESTMENT IN THE CARE HOMES SECTOR 62
5.5.1 Care Home Development Pipeline 62
5.5.2 Care Home Size 64
5.6 BUILDING PROGRAMMES AND EXPANSION PLANS OF LEADING INDEPENDENT CARE PROVIDERS 66
5.6.1 Market Activity 67
6. CONSTRUCTION CAPABILITY AND SUPPLY IN THE LONG-TERM CARE SECTOR 73
6.1 LEADING CONTRACTORS AND DEVELOPERS IN THE CARE HOMES SECTOR 77
6.1.1 Bouygues 77
6.1.2 Building Construction Partnership (BCP) 77
6.1.3 Castlemead 78
6.1.4 Castleoak 78
6.1.5 Galliford Try 79
6.1.6 Keepmoat 80
6.1.7 LNT Construction 80
6.1.8 Stepnell 81
6.1.9 Wates 82
6.1.10 Willmott Dixon 82
6.1.11 Others 83CHART 1 NURSING and RESIDENTIAL CARE HOMES/BED-SPACES BY TYPE OF PROVIDER (%) - 2015 8
TABLE 2 GDP DATA - 2012-2015 - KEY CONSTITUENT ELEMENTS 13
CHART 3 INTEREST RATES AND INFLATION (CPI) FROM 2000-2019 15
CHART 4 PDI and SAVINGS RATIO AT CURRENT PRICES 2000-2019 16
TABLE 5 EXCHANGE RATE FLUCTUATIONS 2010-2015 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 18
CHART 6 UK CARE HOMES MARKET - SECTOR REVENUE (INDEPENDENT/PUBLIC SECTOR) BY % SHARE - 2015 21
TABLE 7 LONG-TERM CARE MARKET BY OWNERSHIP TYPE - NUMBER OF CARE HOMES/BED-SPACES 2014-15* 23
CHART 8 NUMBER OF CARE HOME RESIDENTS 2004 - 2014 (‘000) 25
CHART 9 FUTURE DEMAND FOR CARE HOMES 2015 - 2020 26
CHART 10 NO. CARE HOMES (ALL TYPES) IN THE UK 2014-15 BY REGION 27
CHART 11 NO. BED-SPACES IN CARE HOMES (ALL TYPES) IN THE UK BY REGION - 2014-15 28
CHART 12 PROJECTED INCREASE IN UK POPULATION OVER 65 (AS A PROPORTION OF TOTAL UK POPULATION - %) 2010 - 2081 30
TABLE 13 EXTRACARE HOUSING - NUMBER OF DEVELOPMENTS BY REGION 2015 32
TABLE 14 SOCIAL CARE EXPENDITURE (RESIDENTIAL CARE) FOR THOSE OVER 65 IN 2014-15 BY TYPE OF CARE (£BN) 35
CHART 15 PRIVATE LONG-TERM ADULT CARE MARKET BY VALUE 2009 - 2019 (£BILLION) 37
TABLE 16 LEADING 20 PRIVATE PROVIDERS OF LONG-TERM CARE* - NUMBER OF HOMES AND BED SPACES - 2015 38
CHART 17 NURSING and RESIDENTIAL CARE HOMES BY OWNERSHIP TYPE (%) - 1990 - 2015 45
TABLE 18 LEADING 20 VOLUNTARY SECTOR PROVIDERS OF LONG-TERM CARE 2015* 46
CHART 19 VALUE OF NON-DOMESTIC CONSTRUCTION OUTPUT 2009 - 2019 BY VALUE (£BN AT CURRENT PRICES) 49
TABLE 20 NON-DOMESTIC CONSTRUCTION NEW WORK OUTPUT 2014 - 2019 - BY SECTOR AND VALUE (£BN AT CURRENT PRICES) 52
TABLE 21 CONTRACTORS OUTPUT OF HEALTHCARE SECTOR WORK (PUBLIC/PRIVATE) 2008-2014 (£M) 53
CHART 22 HEALTH CONSTRUCTION OUTPUT FORECASTS 2009 TO 2019 - BY VALUE (£BN AT CURRENT PRICES) 54
TABLE 23 HEALTHCARE RMI MARKET (£M) 2009 -2019 56
CHART 24 PERCENTAGE OF INDEPENDENT CARE HOME BUILDINGS BY AGE 57
CHART 25 CARE HOME OPERATING COSTS - SHARE AS % OF FEES - STAFF, CAPITAL, RMI, SUPPLIES and SERVICES, UTILITIES ETC 58
TABLE 26 CHANGES IN NEW BUILD CARE HOMES - ROOM TYPES, AVERAGE SIZES, FACILITIES ETC 59
CHART 27 CARE HOME PLANNING APPLICATIONS H1 2015 - % APPLICATIONS BY REGION 63
CHART 28 AVERAGE SIZE OF CARE HOMES (NURSING and RESIDENTIAL) IN ENGLAND 2004 AND 2014 65
TABLE 29 MAJOR CARE HOME PROVIDERS/DEVELOPERS - DEVELOPMENT PLANS 2015 - 2020 SUMMARY TABLE 69
TABLE 30 LEADING CONTRACTORS and DEVELOPERS IN THE PRIVATE CARE HOME SECTOR - KEY CLIENTS, CAPABILITY and EXPERIENCE 74

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