March 28, 2019 Finance

Knight Frank report £1.49bn invested in UK healthcare real estate

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Knight Frank, the global property adviser, has reported a strong year for real estate healthcare investment, with a 13 per cent increase in documented transactions to £1.49 billion in 2018, in their latest research report Healthcare Capital Markets 2019.

  • Domestic and overseas investors attracted by strong returns
  • investment up 13% year-on-year
  • Domestic investors continue to invest in healthcare property with UK REITS and quoted property companies accounting for just over half of all deals with £800 million invested. Overseas investment has risen by 20 percent and is edging closer to its 2013 peak when 70 per cent of all capital came from abroad. Adult care homes and supported living accommodation, with £350 million invested in 2018, accounted for 24 per cent of all recorded healthcare deals.Julian Evans, Head of Healthcare Hotels & Leisure, Knight Frank, commented: “With healthcare total returns averaging 8.3 percent over the last five years investment in healthcare real estate remains popular. Much of this investment has come from specialist REITs and niche funds who have been well placed to acquire healthcare stock from care operators which has led to a significant number of sale and leaseback deals, allowing REITs to grow their portfolios and operators to dispose of assets and capitalise on record pricing.“Although overseas transactions have softened in the last five years, European funds and global investors continue to seek exposure to the UK healthcare market. A recent trend is the interest from APAC infrastructure funds and private equity firms seeking to increase their exposure in the UK healthcare sector through both property and operating company acquisitions.

    “An ageing population in the UK means that investors focused on healthcare are also likely to diversify into the senior living sector as this model emerges. Overall, the future of the healthcare real estate sector appears to be on a robust and stable trajectory.”

    In Q4 of 2018, Knight Frank acted as the adviser on a record £5.5 billion of healthcare refinancing for a mixture of UK high street clearing banks, institutions and overseas capital.

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