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Investors, developers and providers are looking to significantly increase their presence in the UK healthcare sector, according to CBRE’s 2024 UK Healthcare Sentiment Survey.
CBRE found that 62% of investors intend to increase their allocation to healthcare real estate, 70% of developers are set to take on more healthcare projects, and 50% of providers plan portfolio growth over the next five years.
With Bisnow’s Healthcare Real Estate Outlook event coming up in London on 8 May, CBRE’s report identified the UK capital as having the greatest demand for care services, thanks to its density of population, affluence and limited new care home developments. However, developers are also looking at the Midlands and the east of England to address the undersupply, CBRE said in the report.
The findings also showed a gap between investor demand and developer activity, particularly in the senior living asset class, with 44% of investors targeting these assets but just 24% of developers bringing them to market.
Providers are also focusing on existing care homes, either alongside new developments (60%) or as a standalone strategy (23%), rather than developing new schemes because of the long planning timelines, cost inflation and land availability, CBRE warned.
“Providers want to grow their portfolios to support the provision of much needed care beds in a number of subsectors, notably senior living and specialist care,” CBRE co-Head of UK Healthcare Sarah Livingston said in a statement. “The synergies across all three respondent pools can hopefully act as the catalyst in a positive cycle of supply and demand over the coming years.”
Investors have also pivoted from income-driven strategies to opportunistic and value-add assets as they seek attractive returns, high occupancy rates and strong fee rate rises, with 84% of respondents saying their appetite for risk had increased.
“Healthcare is a resilient asset class — it offers robust demand levels and traditionally, long lease terms,” CBRE co-Head of UK Healthcare Tom Morgan said of the findings. “However, not all investors can adopt a wait and see approach and as a result, we’ve seen many becoming less risk averse in order to deploy capital. They’re now taking advantage of the opportunity afforded by shorter leases, rather than focusing on income duration.”
Bisnow’s Healthcare Real Estate Outlook will be at the Victory Services Club in London on 8 May and includes panels on the investment landscape and healthcare trends for demand, development and design.
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