Despite the unprecedented challenges of 2020, Christie & Co notes the admirable strength and resilience of the care sector. During the first wave of the pandemic, the sector was tragically hit with a number of resident deaths which reduced average occupancy levels to circa 80 percent and resulted in numerous financial and operational challenges, including the sourcing of PPE and managing staff absences due to sickness or self-isolation.
As more support has become available, the situation has certainly improved and, during the second wave, homes were much better prepared in terms of having the equipment, resource, and the support needed. Following increased testing and other innovations such as dedicated COVID-19 secure visitor areas and most recently the vaccine roll-out, Christie & Co anticipates a gradual recovery in occupancy as admission levels increase during Q2.
The Business Outlook report goes on to detail the impact of COVID-19 on the sector, how it has adapted through these challenging times and its recovery progress, as well as Christie & Co’s business activity and how the investment and development landscape has fared.
For this year’s report, Christie & Co also surveyed a pool of care business operators to hear their views on sentiment in the market, and how they feel about business operations in 2021. Unsurprisingly, 93 per cent of care operators said they feel their business has been impacted by COVID-19. Almost half of respondents said they expect it will take between 1-3 years for the sector to recover, however, 37.7 per cent are more optimistic, and think that recovery will be seen within the year.
35.5 per cent of respondents said they are planning on selling their business or some assets in 2021 and 29 per cent said they are planning on acquiring which indicates an active transactional market this year.
Additionally, the report includes Christie & Co’s Price Index, which states, for the first time since 2009, a negative price index movement. This is largely due to a reduction in trading performance and is not related to the demand for care businesses which remains strong – particularly as a result of the sector’s profile during the pandemic. As part of its sentiment survey, the company also asked respondents to share their views on pricing movement in 2021 and found that 43 per cent think it will stay the same, 20 per cent think we will see an increase, and 37 per cent think we will see a decrease.
Market predictions for the year ahead:
- An increase in activity as major portfolio processes paused in 2020 move forward and new opportunities are placed on the market.
- Increased activity with investment transactions as funds that were gated, or otherwise paused new deal activity in 2020, return actively to the market.
- Occupancy levels are likely to re-build in 2021, and referrals will increase as the vaccination and testing programmes are rolled out during Q1.
- Interest in the UK care sector from overseas capital is likely to increase further and we may see European consolidators become increasingly active in the UK market.
- Development activity is likely to continue at pace, both for care homes and extra care/ housing with care schemes. The development of new facilities is essential to keep up with demographic demand and the structural undersupply of future-proof care beds in the UK.
- In summary, whilst the third national lockdown will create some challenges, there is equally very positive news relating to the vaccine roll-out. As we get to Easter and during H2, we anticipate a steady recovery in trading performance coupled with a notable increase in transactional volumes and a continued level of strong development activity.
Richard Lunn, Managing Director at Christie & Co, comments, “Operators have shown their resilience and fortitude during this pandemic, and that confidence has been echoed by investors who continue to seek out the sector in growing numbers. Despite the challenges, we believe the focus on care over the last year will highlight the demand and opportunities for quality operators and businesses going forward.”
To read the full report, ‘Business Outlook 2021: Review. Realign. Recover’,
please visit: https://www.christie.com/news-resources/business-outlook/2021/care-business-outlook-2021/
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