While demographic trends support the case for increasing the provision of accommodation for the elderly, market trends and the impact of covid on other asset classes have revealed healthcare real estate’s desirability as a defensive investment according to Knight Frank’s head of healthcare Julian Evans.
“The provision of real estate within the healthcare arena is inadequate, it desperately needs inward investment and investors that understand the sector,” he said.
But investing in the sector is now highly competitive. “One of the other key drivers would be that the average unexpired commercial property lease is only two years, so to try and find 30-35 year, what we call fixed income or long-dated leases, is incredibly difficult,” he told Real Asset Insight’s Richard Betts.
Before the global financial crisis in 2007-2008, investment in the UK healthcare sector was mostly domestic. But since the GFC US and European REITs have entered the market and “created a real broad church of different investors,” Evans said.
Covid has only reinforced the sector’s case, said Evans. “There was an awful lot of rhetoric in the press and the media that didn’t understand just how safe care settings are,” he said. “They are some of the safest care settings and that’s bearing out now.”
Click on the video above to watch the full interview or listen to the podcast below.