Healthcare in general and senior housing, in particular, are asset classes that investors should bet on, experts agreed at Real Asset Media’s Iberian Investment Briefing, which was held online recently.
‘Healthcare is a huge opportunity because there is a massive lack of supply, people are ageing fast and a lot of stock is Government-owned and managed,’ said Cristina García-Peri, Head of Corporate Development and Strategy, Azora. ‘As public finances are creaking after the epidemic, we’ll need private money to build all the nursing homes that are needed as well as other products that don’t exist yet’.
There will be opportunities across the board, in creating retirement villages with medical facilities and in providing healthcare to the elderly in their homes to reduce the burden on hospitals and nursing homes.
‘Spain could become the Florida of Europe, a place for people to retire to senior villages with a good climate and quality of life,’ she said. ‘But standards must be high, so it’s an opportunity for institutional money with the right capital to upgrade or to build these facilities in the right way’.
A lot of activity, including M&A, is expected in the healthcare sector in the next few months.
‘Healthcare and senior living is a particularly interesting area in the Iberian market,’ said Simon Wallace, Global Co-Head of Alternatives Research & Strategy, DWS. ‘There is a real lack of product, so if you are an investor willing to forward-fund, work with operators and go up the risk curve, then there is a lot to do’.
However, many investors who are not willing to do development are hesitating because the products are not yet there for them to buy.
They are more likely to opt for residential, said Wallace: ‘Resi is a strong call for many global investors, as it’s still a very small part of their portfolio but offers great quality of income throughout the cycle’.
The sector that will see the most outperformance and rental increases, according to DWS, will be the commuter market, suburban/edge of town locations that offer larger more family-focused units and the possibility of working from home.
‘We like the rented residential trend, that will be accelerated by Covid-19,’ said García-Peri. ‘When government support ends we’ll see the real damage done to the economy, less people will want to take on a mortgage and rentals will become more popular’.
As more international capital flows into resi to exploit the opportunities it offers, it is important to offer investors a friendly and stable legal framework to encourage them to stay. ‘We’ve seen in Germany how damaging it is to when legislation doesn’t welcome foreign investors,’ she said. ‘The result is reduced access to housing for local people’.
Missed Real Asset Insight’s Iberian Investment Briefing? You can watch it here: