The volume of investment ploughed into healthcare real estate by institutional investors since 2015 has doubled or even tripled in some countries.
Having bought at 6%, some investors have been rewarded by yield compression that means that today in France prime healthcare assets trade at 4% and in Germany, at about 5%.
“The outlook is, [healthcare is] going to be more and more popular among investors because today they’re in search of long leases, off the correlation and clearly healthcare assets fit that,” said Daniel While, director of research and strategy, Primonial.
But While cautions that successful investment in healthcare is dependent on knowledge of the operators.
“Assessing the operating risk is absolutely crucial when investing in healthcare real estate,” he told Real Asset Insight’s Richard Betts. However, he added that the consolidation currently occurring among the operators makes the sector more interesting, not least because of the sale-and-leaseback opportunities that it precipitates.
“What will be a real driver of performance is the capacity for partnerships with big pan-European operators,” While said.
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