The private healthcare sector is struggling with falling profit margins even as the wider healthcare market outperformed other parts of the UK property industry.
Colliers International’s latest healthcare market review shows that profit margins for personal care fell from 32.3% to 30.8% in the first half of 2017. Fees have dipped slightly from £538 a week to £536 while occupancy dipped from 92.1% to 91.8% in the same period.
Other healthcare sectors are performing better, with fees at nursing homes rising 5.2% in nominal terms and 1.9% in real terms in 2017.
While EPRA UK indices as a whole are down by 3% since June 2016, healthcare REITs are up by between 11% and 15%, the research showed, which means the investment market remains resilient.
Adam Lenton, head of healthcare at Colliers International, said: “Demand for quality care provision in care homes, through primary care and the NHS, continues to intensify. This is offset against limited progress with improved facilities, planning regulations, staff recruitment and retention and private investment – and that’s before we can make a dent in the Brexit negotiations and the ensuing ramifications of our departure from the EU.”
