Where are the new beds? Just 231 aged care builds in 2021-22

Only 26 aged care building approvals in 2021-22 were valued at over $20 million – confirming that few residential care operators are embarking on large-scale projects.

The Financial Report on the Australian Aged Care Sector 2021-22 has revealed that the total number of new aged care builds in Australia has dropped for the fifth year in a row to just 231, from a peak of 351 in 2017-18.

Look at the graph above.

As you can see, 36% (84) projects were valued at $0 to $250,000, 19% (45) were priced at $250,000 to $1 million and 22% (51) between $1 million to $5 million.

Just 10% (25) fell between $5 million to $20 million.

Given the average aged care bed now takes $400,000 to build and operationalise, it is likely that most of these projects are refurbishment or expansions, not new homes.

In total, the value of aged care building activity has dropped to $3.8 billion, an 18.5% decrease on the $4.7 billion spent in 2020-21.

This situation is also unlikely to change soon.

Just 2.7% of facilities were planning to upgrade, compared to 3.5% in 2020-21. The proportion planning to rebuild also fell slightly from 0.7% last financial year to 0.5%.

The Report attributes this decrease in expenditure in part to “the ongoing fragility and volatility in the broader construction sector which has led to supply chain disruptions, builder shortages and significant cost increases.” 

“This has led to lower levels of building activity in the residential aged care sector,” it states.

SATURDAY: There is no doubt that the construction crisis has impacted on the building of new residential care. But is the lack of new development associated more with the general lack of capital available to build new beds? See this story.