Care home investment moves into the mainstream
It’s no secret that people are living longer. In fact, research shows that the UK’s over 75s population is growing at an unprecedented rate.
An ageing population and an undersupply of beds has helped propel the healthcare property investment market into mainstream.
According to the experts are Jones Lang LaSalle, care home investments have become more popular in recent years due to the high demand for beds in the UK.
“We identified that there are currently 465,000 care beds in the UK and 5.3 million people over the age of 75,” James Hanson, head of the healthcare team at Jones Lang LaSalle commented.
“By 2035, we’re going to need 795,000 care beds to accommodate the 9.1 million over 75-year-olds in the UK. If you project that forward, you’ve got 290,000 unmet care beds and 310,000 further beds that need refurbishing and replacing to keep up with the demand, that’s the driving force for investors,” Hanson added.
The rise of care home investments
Healthcare property has become a popular asset class and with sentiment from funds and institutional investors on the up, the sector is set for an injection of money.
Knight Frank has even gone as far as to state that they expect that more pension funds and instructions will actively buy in this market. The Company predicts that around £2 billion worth of stock is being reserved in this particular market.
What’s more, the most recent report from CBRE estimates that roughly £463 million of investment has been spent on healthcare property this year.
It is thought that the healthy returns recorded in 2014 – where returns from healthcare property increased from 5.4% to 9% – may have enticed investors into the market.
Rising returns has triggered a flurry of investment however, experts believe that this is not the only reason why the asset class has become increasingly more popular.
Some experts think that the healthcare property sector is, in essence, ‘recession proof’. Should times of economic uncertainty hit the UK again, the need for this form of property won’t fall significantly. This would, in theory, mean that investors would continue to achieve strong returns.