Building perfect care home analysis – What data are you using?

Picture this: your land buyer or property agent notify you that they have found the perfect location for your next luxury care home development.

You run the numbers. The elderly population, bed supply, house prices and staffing potential all stack up. Now it is time to start investing your valuable time and capital into the new project.

But let us pause for a moment. Have you ever considered the source, methodology and vintage of the demographic and care market data that you are basing high value capex decisions on? With average acquisition costs of market standard homes currently running at around £56,000 per bed, why wouldn’t you question the quality of your appraisal data? After all, would you construct a care home using old tools and inferior materials?

Whether planning a new build, acquisition, refurbishment, or disposal – at CACI we understand the importance of using flexible, realistic catchment methodologies along with current and future demographic, care market and planning data. Let’s take a look at the key materials to construct the perfect care home demand tool.

CATCHMENT IS KING

Understanding where target care home residents live, their next of kin, competition and proximity to local services is key to estimating a care homes catchment. For example, you can’t assume a 5 mile radius will work in a rural location when measuring care bed demand, and the same can be said for city centres, where people are reluctant to relocate beyond their local community. It’s essential to get the catchment right and have the capability to ‘flex’ it according to accessibility. When focusing on a rural location, drivetime and the public transport network must form part of the catchment equation. Using a circle catchment assumes that people will cross water and travel through busy city centres.

Circular catchments are one of the options in CACI’s Caremapper market analysis solution. But we’d recommend using its drivetime and public transport catchment options to accurately reflect local accessibility issues. The maps in Figure 1 demonstrate why catchment is king. A 5-mile circle assumes the catchment of this care home near Southampton will cross the Solent, whereas the 20-minute drivetime reflects reality.

Figure 1 – Drivetimes clearly reflect actual catchment accessibility

KNOW YOUR DATA SOURCES

Some operators, investors, developers, and advisers are still relying on open data from 2011 Census. Worryingly, since the 2011 Census the population aged 65 and over has increased by a staggering 2.1m (21%). Not only is 2011 Census data incredibly out of date at a national level but, locally, the care bed demand landscape has changed beyond recognition.

For example, in the 1960s, the UK Government decided that a generation of new towns in the South East of England was needed, to relieve housing congestion in London. The biggest was built in Buckinghamshire, and Milton Keynes was born.

How has the founding generation of Milton Keynes residents aged since the 2011 Census?

CACI’s latest 2020 population data estimates that the number of over 65-year-olds in “MK” has increased by 43%. More than double the national average! What risk would under-estimating bed demand by almost half have on your investment?

LOOKING TO THE FUTURE

It’s not just about obtaining current population data. After all, care homes do not appear overnight. Initial funding through to completion can take as long as 5 years, therefore it’s essential to accurately project the elderly population in 5 years’ time and beyond. Staying with the example of Milton Keynes, CACI local population projection data estimates that bed demand for over 65’s is likely to grow in 2035 by as much as 45%, as shown in Figure 2.  Again, that’s a big margin of error in your critical investment decisions.

Figure 2 – Milton Keynes care bed demand projection

EQUITY DRIVES OCCUPANCY

In recent years, the private care sector has seen significant growth.  As a result, the “wealth” of the older population has become a major factor in measuring private care bed affordability. So, it is no good just focusing on the elderly population if you’re planning to build luxury care beds. Average house prices can also skew results, that’s why it’s important to understand equity market volume too.

Care bed demand measures need to be refined to the operators own specific target market, such as the number of over 75’s who own high value properties, with the wealth to afford luxury fees and fulfil operators ideal minimum occupancy terms.

As a result, Caremapper includes the ability to easily calculate local affordability in simple period of residency terms, based on your own fee rates and your own target market, as shown in Figure 3.

Figure 3 – Milton Keynes affordable residency term based on £1,750 weekly fee

KNOW YOUR COMPETITION

As with target residents, when assessing competition, it is vital to ‘separate the wheat from the chaff’ and only include specific competitors, whether current or planned, as shown in Figure 4. After all it’s no good including sub-standard homes into the care bed supply calculation and under-estimating a great opportunity.

Figure 4 – Caremapper provides regular updates on current and future bed supply

ALL THE TOOLS YOU NEED UNDER ONE ROOF

Referring to the initial idea of using the best tools and materials for constructing a care home. CACI’s Caremapper acts as the Builder’s Warehouse. It provides access to all the tools and materials you need – including key appraisal variables from CACI’s ocean of individual data, planning data and market data to summarise and grade potential investments.

Figure 5 – Example Care home catchment analysis

There is no longer any need to scour pages of data to come to a preliminary investment decision. Caremapper summarises the KPI’s for assessing sites in clear colour flags, as shown in Figure 5, providing additional detailed supporting data and context when required.

For further information on how CACI can support you please contact: Paul Nash, Associate Partner, Location Intelligence – pnash@caci.co.uk