A lack of senior housing stock in the UK, an active ageing population, and measurable investor interest means the sector is a prime opportunity for growth over the next decade, according to Colliers’ ‘European healthcare – a growth market’ report.

Colliers’ UK healthcare team stated that only 0.6% of total UK housing stock is aimed at the over-65s, which currently represents 14% of the overall population. Colliers’ recent ‘Global Investor Survey’ found that 21% of respondents expressed an interest in investing into senior living assets this year, adding that with number of over-65s set to grow to almost 18 million people by 2035, to 18% of the population, there are opportunities to be secured.

Max Broadbent, director in the healthcare team at Colliers UK, said: “With the UK’s ageing population there will be continued growth in alternative elderly care and housing model demands, such as retirement villages, assisted living and extra care facilities. Currently the proportion housing stock for senior living with care in the UK is at 0.6%, whereas the likes of Australia and the US have 5%, so there’s definitely room for further investment.

“Last year we saw significant investment in care homes and the acute sector, but there is a gap in the market for investors to target the active and mobile older population, who want to live in a property and location that is appropriate for their stage in life, where they’re still independent and able to socialise, but are in a safe environment that will ensure they’re able to stay active for longer.”

The report examined eight key European markets it found that during 2020 and into Q1 2021 the nursing and care home component of European investment volumes superseded the trading of senior living assets for the first time in five years. So far this year, investment volumes into the sector have expanded from a five-year average of 2.3% to 3.8%.

The report stressed that although volumes of around €7 billion a year are small in comparison to other sectors, the opaque and nascent nature of healthcare as a real estate investment class means the reporting of transaction volumes is lower than what is happening on the ground.

Author of the report Damian Harrington, director and head of EMEA research said: “We know the investment community continues to branch out into a range of niche and alternative asset types in the search for product and income. The proven long-term positive risk-reward balance of the senior living and healthcare sector in more mature markets such as the UK, alongside the significant growth in demand for assets and care services created by an aging population is attracting greater diversity of capital to this sector. The expansion of the 65-plus population to 18% of our population by 2035 is multiplied by high levels of wealth, creating demand for more senior living options.

“Although investment demand for primary and secondary healthcare facilities is lower at eight per cent and two per cent according to our survey, the sector also benefits from strong growth drivers. In the UK there has been a declining level of national provision of hospital beds and nursing care over the last decade. Consumer spending growth on private healthcare and private healthcare insurance will continue to drive underlying demand for a broader range of healthcare assets, as the expansion of NHS provision is set to remain muted. This will create additional investment options for investors, albeit of a more complex and niche nature.    

“The pandemic highlighted the shortage of acute care beds in the hospital sector. With the government likely to continue to drive down investment in NHS hospitals, albeit 40 new ones have been promised, private hospitals will need to play a pivotal role to meet healthcare demands creating further more complex, but low risk opportunities.”

Date published: July 5, 2021

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