London,
19
February
2015
|
15:57
Europe/London

2014 investment transaction volumes in UK healthcare market reach £4.5billion

But CBRE forecasts barriers to investment mean £20bn of real estate and institutional capital is still seeking investment in UK healthcare

Private investment into the UK healthcare sector is soaring – with transaction volumes exceeding £4.5 billion in 2014, according to latest research by CBRE. Of this total, approximately £1.2 billion came from direct real estate investment, the third consecutive year that this has exceeded the £1 billion mark.

CBRE forecasts that an additional £20 billion of domestic and international capital is currently actively seeking investment opportunities in the UK healthcare sector, most of it long-term, cautious money. This investment could dramatically transform the UK health and social care sector but is struggling to deploy because of challenges including the lack of integration in the current healthcare delivery system, a perceived lack of engagement by the public sector and a prohibitive procurement process for new developments.

 

David Batchelor
“Investment in UK healthcare is soaring – this is the third year direct real estate investment has gone above the £1 billion mark. But far more could be done, with some £20 billion of capital looking for opportunities to invest in the healthcare sector if barriers to investors were removed. It is critical that more progress is made to realise investment opportunities across the public and independent sectors. The healthcare sector has experienced years of under investment and the NHS is creaking under the pressures now being placed upon it due to trends such as an ageing population. A new wave of investment is critical to ensuring it can evolve to meet the needs of the population and lessons of the past need to be learnt about how the public sector can engage in a sustainable long term manner, with the private sector.

By 2030, the number of people aged 60 or over is expected to pass the 20 million mark[1] and will require increasingly specialist support, care and property from which this may be developed. Whilst investment into the elderly care market in 2014 continued in the same vein as recent years, notably of the c.£1.2 billion invested last year, less than £500m was via direct real estate investment, the remainder being corporate acquisitions. We anticipate this capital seeking new and innovative ways to invest in healthcare real estate. Responsible investment of real estate capital can go a long way to improving our health and social care facilities so they are fit to meet the needs of our population.”
David Batchelor

According to CBRE analysis, overseas investors remained the most active in 2014, involved in more than £1.76 billion of transactions across the year, but domestic investors are returning to the market, contributing over £800 million overall. This return to UK healthcare was led by institutions Legal & General and M&G and specialist investors Assura and Target Healthcare REIT who between them invested over £560 million over 12 months.

Download the report here -

[1] Mid-2013 Population Estimates UK Office for National Statistics, 2014