UK Healthcare Property sector remaining buoyant

UK Healthcare Property sector remaining buoyant

In their latest Healthcare Capital Markets report, Knight Frank have identified 5 key trends that are shaping the UK healthcare property investment sector currently. With nearly £1.5 billion invested in this sector during 2018, it’s certainly an emerging part of the overall market. Here are the key trends that Knight Frank have identified:

Unique Characteristics – the UK’s ageing population has been a major factor in the growth of this sector, driving occupancy rates to nearly 90%. Income for healthcare property tends to be very long-terms with typical 30-year lease terms and RPI-indexed rental increases  – this compares to lease lengths of only seven years in other commercial sectors. For investors looking for long-term secure income growth, health care property is an attractive proposition.

Domestic and Overseas Interest – There is high investment in this sector from domestic buyers, especially from specialist healthcare REITs and property companies. There is also a growing appetite from international investors who see the long-term benefits of the sector.

Specialist Healthcare Segments – Whilst the elderly care segment of this sector is the most prevalent, there is growth in other areas such as primary care, child care and adult-supported living that are attracting significant interest from investors.

Strong Investment Performance – The healthcare sectors has outperformed the MSCI ALL UK property average for three years in a row. With total returns of c.10%, the sector is achieving strong results.

Future Growth – The aforementioned ageing UK population, mature healthcare infrastructure and long-term financial benefits means that the UK will remain a hotspot for global investors in this sector.

For more advice about investing in the UK healthcare property sector, please get in touch.