The study of 686 facilities, believed to be the largest independent study of residential care providers in Australia, found high consumer demand for modern aged-care facilities was not being matched by investor interest because of low returns.
Conducted by business consultants Grant Thornton, the results showed an overall drop in average returns in the past 12 months of 10 per cent for new, single-room facilities.
The consultants estimated that the average return on investment for the new single-room facilities was now just 1.1 per cent.
Grant Thornton's head of national aged-care services Cam Ansell said current regulatory and funding arrangements needed reviewing to boost investment.
Nursing home residents now wanted single en suite rooms, or adjoining rooms attached to an en suite, instead of shared multi-bed rooms, he said.
"We've basically had a major paradigm shift in consumer demand where the expectations of the privacy and dignity and comprehensive care within these facilities means investment is significant," Ansell said.
"Unfortunately, under the current regulatory framework the revenues you get for investing in these very expensive facilities, which are much more costly to operate, is no different."
The survey results were presented to federal Finance Minister Lindsay Tanner and Ageing Minister Justine Elliot on Tuesday.
Elliot said Australia's aged-care sector was strong with the federal government providing record financial support.
"No Australian government has invested as much in aged and community care as the Rudd Labor government," Elliot said in a statement.
"After 12 years of neglect, the Rudd Labor government is committed to tackling the challenges of the 21st century, including our ageing population."
The government had introduced $1.5 billion worth of changes in the next four years, aimed at boosting the aged-care sector, while it would invest more than $40 billion into aged and community care over the same period.
On average, the government's funding scheme amounts to around $41,500 for every nursing home resident in Australia, she said.
Aged and Community Care Victoria chief executive officer Gerard Mansour said diminishing returns at a time of unprecedented demand for beds threatened the sustainability of the industry.
"I am concerned for our baby boomers - will they be able to find an aged-care place for their mum or dad, when they need it?"
Current regulations required residents in low-care, non-profit facilities to pay a bond, but were not required by residents in high-care, which comprised 60 per cent of nursing home residents, he said.
"A number of our members are no longer going to construct high-care facilities - they will be going into a different type of business, like independent living units," he said.
A final report on the Grant Thornton findings is due to be delivered to the federal government by December.
