Healthcare sector remains resilient amid Brexit challenges, claims market study

The healthcare sector is proving to be robust in the face of political challenges, according to a new healthcare market review.

Colliers’ 23rd edition of the Healthcare Market Review provides an in-depth analysis of the healthcare property and business sector, focusing on key drivers of the care home industry, covering occupancy rates, average weekly fees, payroll and non-payroll costs and profit margins.

The latest edition of the Healthcare Market Review reveals that in the last twelve months, the sector has continued to provide opportunities amid an uncertain political climate.

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Walter Boettcher, chief economist at Colliers International said that the healthcare investment market is still proving resilient despite the challenges posed by Brexit.

“Reviewing UK REIT performance since the EU referendum in June 2016 shows that healthcare properties performance, as measured by share valuations, were less affected and recovered faster than mainstream UK property asset classes, especially those with exposure to central London.”

The research shows that the personal care sector has seen pressure this year, with static fees and a small increase in average occupancy levels.

The study found that whilst non-payroll costs have remained static, there has been a marked increase in payroll costs over the last half year. Overall, profit levels have fallen for the sector.

The report also highlighted that in the specialist care industry, occupancy rates have remained fairly stable for 91.2% of operators, while there has been a marginal increase in both payroll and non-payroll costs, which has resulted in falling EBITDAR levels in percentage terms.

Adam Lenton, head of healthcare at Colliers International, added: “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 make a dent in the Brexit negotiations and the ensuing ramifications of our departure from the EU.

“Within the private healthcare sector, many existing operators and investors are working proactively to address the issues within their remit and reach; self-regulation, re-investment, creative staffing solutions are tried and tested to try and provide the best care provision possible under seemingly relentless circumstances.”

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