News | Published April 01 2019

Report shows investment in UK healthcare continues to grow

Knight Frank reported an increase of more than ten per cent in UK healthcare investment during 2018 this week.

The property adviser said that investment rose to £1.49 billion last year, based on research conducted as part of its Health Capital Markets report.

Twenty-four per cent of the investment in UK healthcare is now made in adult care.

Julian Evans from Knight Frank said: “With healthcare total returns averaging 8.3 per cent over the last five years, investment in healthcare real estate remains popular.”

It is estimated that a further $200 billion will be invested into global healthcare infrastructure over the next five years, and most institutional investors see the UK as an attractive option.

A 2018 survey by UK investment firm Octopus Healthcare suggests that global investors who already have a stake in healthcare infrastructure plan to increase their holdings in the asset class by more than half over the next five years. Several major UK social care providers are seeking to restructure to take advantage of this new source of development funds.

This weight of capital will be one of the biggest influencing factors in the market in the coming year. The demand for healthcare property seems to be greater than ever – an investor sentiment survey conducted for 2018 by commercial property and investment consultants CBRE identified a colossal £3.5 to £7 billion of equity earmarked for investment into the sector for that year alone. While the dust is yet to settle on the exact figures, CBRE’s healthcare director has said that “[investment] has certainly been significant”.

Given that the total value of the healthcare investments (that is, properties let to operators) transacted in 2016 was under £1.5 billion, the sheer amount of money available is likely to impact on what is sold, and the prices that are achieved. Tom Morgan, CBRE’s head of healthcare, believes the sort of investor now entering the market is taking a much longer-term view and typically wants to work with an operating partner rather than just holding the purse strings.

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Authored by

The Parliamentary Review

April 01 2019

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