Care home occupancy levels are set to recover to pre-pandemic levels in 2022, according to property adviser Knight Frank.
The firm’s latest UK Healthcare Property Market Overview shows that occupancy rates in the older adult care market were down 9.7 per cent year-on-year in 2021, averaging 79.4 per cent.
Despite this fall, which was expected by experts given the pandemic’s effects on the sector, Knight Frank said operators are now reporting improving occupancy.
“All signs (are) pointing toward continued growth toward occupancy rates in the high eighties looking to 2022 and beyond,” said a spokeswoman. “This would see the sector’s average occupancy return to pre-pandemic levels,” she added.
Care home operator earnings meanwhile are stronger than expected, the report finds.
“All care EBITDARM (earnings before interest, taxes, depreciation, amortization, rent, and management fees) as a percentage of income averaged 26.2 per cent in 2021. This is a fall of 0.6% against 2020’s figure, a less significant drop than expected given the pandemic’s impact on occupancy,” it said.
“Notably, EBITDARM for the nursing care sector improved slightly by 0.1 per cent on the previous year. The resilience of all care EBITDARM in 2021 points to strong trading in the sector in light of significant headwinds.”
Knight Frank head of healthcare Julian Evans added: “While 2020 was a record-breaking year for investment into the UK healthcare market, 2021 is a story of consolidation and normalisation.
“We have seen continued demand from a broad church of both domestic and international investors capitalising on the UK’s demographic trends and the sector’s favourable supply/ demand dynamics to generate stable long-term returns, whilst occupancy rates continue to recover from the impact of Covid-19.”
