Care home investment opportunities vary by region

The Credit Crunch was three years ago this month and yet it still remains impossible to avoid the desperation for growth in the UK economy, occupying media output on an almost daily basis.

In such a climate it would be easy to presume that the care sector has been subject to the same frustrations as the housing market, particularly with the collapse of its largest care home operator Southern Cross this summer, that to an outside observers might have suggested an industry in turmoil. However, appearances can be deceptive and care developers are actually reporting on pockets of expansion throughout a number of counties, even if there remain many regions yet to feel any rejuvenation.

Property developers and construction firms have recognised a ‘belt’ of opportunity presenting itself in South Midlands counties and across to their Eastern England neighbours, such as Cambridgeshire and Buckinghamshire, where a rise in planning applications and emerging care facilities can be found. It must be remembered that the care industry can not fail to show an increase in demand as the population ages, even if the Coalition and many local authorities are looking to shift more of the demand onto social care, and care providers will be hoping this central England rejuvenation, not located in the poorest counties but neither in the most affluent, expands and reaches out to other areas of England and the UK.

The form of care provision being green-lit in itself shows that developers favouring the emergence of extra care villages and supported living into the market are having more success, with councillors finding more favour for methods of encouraging self-sufficiency and independence, rather than directing their enthusiasm into more traditional care home environments. Should this belt of opportunity prove fruitful and grow into other regions then it is likely that a different type of care accommodation will emerge to embrace the needs of an ageing demographic.

Developers are also discussing the growing need to be shrewd and well-researched when looking to secure planning approval; for example, believing there are more opportunities for care home development in green-belt areas than might be suspected. Building restrictions are often unclear and interpreted differently by each council, but care developments have an advantage with being able to show a high job proportion for the size of each building, coupled with the rising needs of the elderly populace, especially for people with a form of dementia.

Returning to Southern Cross, it remains important not to jump to conclusions and paint a grim picture of care sector opportunity because of the turmoil of one company, particularly with economists agreeing the health giant’s collapse was the result of a failing business model, no doubt exasperated by economic factors, but in no way representing the sector as a whole.

The Southern Cross fallout will in fact be an interesting development to watch, with many leading healthcare officials believing that small and emerging providers, with highly focused service models, can lead the way out of a crisis through a flexibility that larger companies cannot boast. If such factors prove to be correct then a failing giant actually offers more opportunities to smaller providers and, coupled with these pockets of growth, actually suggests that the care industry has decent foundations for further expansion and development.

Article by: Richard Howard, News Editor