Statement by Sherry FitzGerald Commercial Research
Tuesday, November 28th, 2023
Sherry FitzGerald, Ireland’s largest estate agent, reported today (Tuesday, November 28th, 2023) that the supply of nursing home beds across the country is close to capacity and as such at least 50,000 additional beds will be required between now and 2051 to meet future demand.
In quarter two of this year, the total stock of long-term nursing home beds in Ireland stood atapproximately 30,900. This includes those run by the private, voluntary, and public sectors. It is estimated that 28,450 individuals aged 65 years and over resided in nursing homes in 2022 (Census 2022), suggesting an occupancy rate of at least 92%. The Census data also shows that the ratio of individuals aged 65 years and over to those aged between 15 and 64 years increased to 23.1% in 2022 from 20.4% in 2016.
According to Jean Behan, Senior Economist, Sherry FitzGerald Research; “The 2022 Census data shows that the old age dependency ratio is continuing to rise reflecting increased life expectancy and declining fertility rates. This trend is expected to persist going forward, with population forecasts from the CSO showing that by 2051 an estimated one in four individuals will be in the 65 years and over age cohort. Subsequently, this will impact the demand for nursing home beds.”
Estimating the number of individuals requiring nursing home beds, assuming similar proportions to the most recently available data, suggests that between now and 2051 the supply of beds will have to increase by 161% to meet demand. This equates to an additional 50,000 beds or approximately 1,800 per annum.
These projections assume that there will be no further nursing home closures. However, in reality, many nursing homes have come under increased pressure to meet operational costs, with many recently closed homes citing the rates paid to private nursing homes under the Fair Deal Scheme, as being inadequate to meet these escalating costs. This is particularly true for smaller sized homes who do not have the advantage of greater economies of scale, suggesting that further closures are inevitable.
Commenting on the market, Dermot Hughes, Associate Director, Sherry FitzGerald said “The equitability of the current system is certainly a point of contention amongst many operators, especially in the face of increased costs. Increases in Fair Deal have, in many instances, been outstripped by inflation. The frustrations of privately run homes is becoming significantly louder.”
An analysis of the spread of nursing home beds across the State reveals that approximately 26% or 8,050 were in Dublin. A further 12% were in Cork while Galway and Limerick accounted for 6% and 4% respectively.
It is interesting to note that a comparison of the number of beds in each county with the estimated number of individuals requiring long term nursing home care reveals that there are currently not enough beds to meet demand in seven counties. This includes Laois, Sligo, and Donegal, suggesting that individuals in these counties would have to move out of their county for nursing home care.
A further seven counties had ratios of beds to requirements of more than 110% including Kildare, Wicklow, and Meath. As we move forward however, given the high occupancy rate for the State, this leaves little room for spare capacity.
Investment activity in the nursing home sector was very robust during 2021 and 2022, with Belgian REITs Aedifica, Care Property Invest and Confinimmo accounting for the majority of acquisitions during the two-year period. Similar to other commercial property asset classes, investment in nursing homes was curtailed in 2023 by rising interest rates and elevated building and construction costs. The outlook going forward is more positive however, with interest rates now likely to have peaked, while building and construction cost inflation has eased significantly in recent months. This coupled with the strength of demand for beds should continue to attract strong investor interest going forward.
Further commenting, Dermot Hughes stated, “While the current year witnessed a paucity in activity compared to 2021 and 2022, there remains a clear need for further investment within the market, to keep pace with the State’s shifting demographics. This is likely, as before, to be backboned by European financed investors under Op Co/Pro Co structures. Macro conditions permitting, we consider that Ireland will remain an attractive and targeted expansion market.”
For any further information, please contact:
Jill O’Neill
PR Director
Sherry FitzGerald Group
Ph: 01 2376 500 / 086 252 3277
