UK’s Ageing Population Offers Lucrative Investment Opportunity

United Kingdom, like the rest of the world, is ageing. Britain’s ageing population has brought to the surface, issues surrounding proper care housing. Found below is a compilation of statistics regarding England’s elderly population to illustrate  how the UK care homes market has claimed the title  of ‘stand out asset class’ for investment and how this claim is likely to be retained.

What entails England’s stately developed country is an equally impressive population growth. Predictions made from the Office of National Statistics (ONS) presents the specifics of England’s future population:

According to latest figures by ONS, the UK’s population in 2016 was at its largest ever at 65.6 million, and is projected to reach over 74 million by 2039, ascribable to higher birth rates and immigration rates.

This projection by the ONS which shows the distribution of the UK population from 1976 – 2046 depicts an ageing society in the UK that is growing where other age groups are reducing.
This projection by the ONS, which shows the distribution of the UK population from 1976 – 2046, depicts an ageing society in the UK that is growing where other age groups are reducing. Source: ONS

An Age-diverse England

A growing elderly population is inevitable in the face of an expanding population, paired with increased life expectancy in the UK. In 2016, the old age dependency ratio (OADR) revealed that for every 285 people aged 65 and over, were 1,000 people aged 16 to 64 years (i.e. the traditional working age). The number of those aged 65 and over is expected to rise, with 157 local authorities looking at an OADR of about 500:1000 by 2036 compared to only 11 local authorities in 2016.

Even more bewildering is the fact that West Somerset is projected to have an OADR of 928 by 2036 — there will pretty much be the same number of those aged 16 to 64 years as those aged 65 and over!

Furthermore, over the next 25 years or so, one in 12 people will be aged 80 or above, with centenarians being the fastest-growing age group!

Source: http://lifeofayouthpastor.com/the-big-100/
The number of centenarians in the UK is growing! Image source: http://lifeofayouthpastor.com/the-big-100/

The predictions made above show UK’s population pyramid evolving into more of a rectangle — ONS predicts that the number of those aged 65 and over will grow to nearly a quarter of the population by 2046!

Such figures perforces more attention to be directed towards older citizens whose well-being requires special care. In most cases, this special care is presumed to be provided by adequately established care homes.

However, this has not been the case in the UK.

The UK Care Home Crisis

Like any other country, the UK, too, depends greatly on well-run care homes to provide special care for its burgeoning number of seniors. However, a closer look at care homes in the UK shows a critical undersupply for corporations to act on.

Knight Frank’s UK Healthcare Development Opportunities 2017 report identified a decrease in the number of registrations of both new care homes and new beds. Combined with the long-term trend of increased deregistrations, this has caused a nett loss of 166 homes and 2,612 beds across the UK market as of September, 2016.

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester). Which is why there is an increasing need for properly built, fully-functional care homes that cater to the varied needs of the aged and infirm.

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester).
Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester).

A Quick Look At Those Affected By The Shortage

Image on the ageing statistics in the UK taken from csiprop.com website. 
Image on the ageing statistics in the UK taken from csiprop.com website.

 

Dementia, replacing heart disease, has become the leading cause of death in England and Wales. There are currently 850,000 people with dementia in the UK, with numbers set to rise to over 1 million by 2025, soaring to 2 million by 2051.

The sizeable amount of dementia-afflicted citizens (850,000) compared to only 416,000 people of varying illnesses who do live in care homes in the UK, illustrates the worrying issue at hand.

To put into staggering percentages, 96% of the population aged 65 years and over and 84% of those aged 85 and above are completely unattached to care homes (Laing and Buisson Survey 2016).

Dealing with the Crisis: Good news for England’s Older Citizens & Property Investors

Source: http://www.vulture.com/2016/05/grace-and-frankie-recap-season-2-episode-5.html
Source: http://www.vulture.com/2016/05/grace-and-frankie-recap-season-2-episode-5.html

Julian Evans, Knight Frank’s Head of Healthcare said, “The disparity of care bed supply and demand presents increasing opportunities for investors, and, combined with the fall in the sterling, has generated a truly global appetite for the sector. This sector is likely to be the stand out asset class of 2017, particularly for those investors wishing to diversify their asset portfolios in the current uncertain economic climate.”

The care home sector has high prospects for continued success going into 2018 — in January 2018, carehome.co.uk had its highest ever traffic to the site with 1,579,285 visits. This was up from 1,144,572 in December 2017, with an increase of 38%!

Moreover, recent news highlights that demand for care home places will soar by more than three quarters in less than 20 years!

CSI Prop director Virata Thaivasigamony on the company’s website, compares the incredible growth potential of care home sectors with one of UK’s top investment asset class: purpose-built student accommodation.,

“The undersupply of care homes has created opportunities for investors. With the UK’s ageing population, care homes investment could be the next student property investment.”

Also highlighted by the director is the average cost of £574 per week at a care home facility in comparison to Britain’s residential property rent that averages at £212 per week — this inevitably constitutes very impressive returns!

It is evident that the care home sector, subject to the same law of economics that observes every other form of investment, is very likely to be on the side of the investor — demand for more care homes and care beds is peaking and undersupply continues to be an issue.

With all said and proven, the prudent investor would find it in their best interest to consider the UK care home sector. After all, returns, in this case, seem to be almost absolutely guaranteed.

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