Our recent Wales Healthcare Market Insight 2024 report reviews the need for new build development or refurbishment across Wales. What does the report tell us about the barriers that have prevented developments in the country and the opportunities for developers, operators, and funders across Wales?
The Barriers
Historically, one of the reasons that the development of new build care homes in Wales has lagged behind England is the lower average weekly fee rate potential. Following a period of rapid inflation, construction costs are at an all-time high and it is critical that fees are at sufficiently strong levels in order to provide viable development economics for new care home schemes to come forward.
Additionally, some areas in Wales have sparser population profiles compared with England, which has deterred operators whose models are reliant on larger, modern-style care homes. Smaller populations may also be further away from good public transport and road connections to the wider area.
Population not only impacts the demand for beds within a certain vicinity, but also how easy it will be to find and retain staff. Staffing is notoriously an issue in all areas of the care sector, and population depth is an increasing focus for those in the new build development and investment market.
Opportunities in the Marketplace
Between 2020 and 2024, the number of EMC (Effective Market Capacity) beds in Wales increased by just 5% while the demand for beds rose by 20%. Following this trajectory, we forecast there will be a total undersupply of 1,672 EMC beds in North Wales and 7,423 EMC beds in South Wales by 2034.
This deficit presents an opportunity for developers, operators, and funders to capitalise on early mover advantage in the market by securing positions on development sites in areas that have a demonstrable need for EMC beds.
The lack of high-quality future-proof beds within Wales means it is a less competitive operating environment than many parts of the UK in locations that may have similar levels of affluence and population. New care home schemes will provide en suite wetrooms as standard, and often have communal resident amenities such as cafés, activity rooms, library/cinema, salon, and landscaped gardens.
There is also the opportunity for existing care home operators to refurbish their current stock and ‘future-proof’ their beds. As reported in our Wales Healthcare Market Insight 2024, there are 21,820 elderly care beds in Wales and only 25% of those beds have wet room provision (as of March 2024), so there is a clear need for current stock to increase in quality.
There is no doubt there is demand for a great number of EMC beds in Wales and those investors who enter the market early to develop new-build, future-proof schemes will benefit from the long-term dynamics of the Welsh market.
