London, May 4, 2024: The UK healthcare real estate sector is poised for substantial growth in the near future, according to the latest insights from CBRE, a prominent commercial real estate services firm. Investors, developers, and providers are aligning their strategies to capitalise on burgeoning opportunities in this dynamic market.
CBRE's recently conducted 2024 UK Healthcare Sentiment Survey paints a picture of unanimous growth expectations across all facets of the industry. Noteworthy figures include 62% of investors signalling their intent to bolster allocations to healthcare investments, while 70% of developers are preparing to embark on a flurry of new healthcare projects. Similarly, half of all healthcare providers are charting paths for portfolio expansion over the next half-decade.
However, beneath this collective optimism lie regional intricacies. While London is anticipated to spearhead demand for care services due to its high population density, affluence, and limited new care home developments, regions such as the Midlands and the East of England are emerging as hotspots for growth, driven by acute undersupply issues and relatively lower competition risks.
Yet, CBRE's survey underscores a significant divergence between the healthcare assets targeted by investors and those actually being developed by stakeholders. This gap is particularly conspicuous in segments like Senior Living, where investor interest outstrips actual development initiatives, potentially reflecting market immaturity and regulatory ambiguities.
Navigating the challenging development landscape, characterised by protracted planning timelines, cost escalations, and land constraints, providers are recalibrating their strategies. Acquiring existing care homes, either in conjunction with new developments or as standalone ventures, has emerged as a favoured approach, with a mere 18% of providers actively scouting for new schemes.
Sarah Livingston, Co-Head of UK Healthcare at CBRE, emphasised the imperative of portfolio expansion among providers, stressing the urgent need for additional care beds in sub sectors such as senior living and specialist care. Livingston expressed confidence that the convergence of objectives across investors, developers, and providers would fuel a positive cycle of supply and demand in the years ahead.
Furthermore, the survey reveals a noteworthy shift in investor sentiment, with many pivoting from income-driven strategies to more opportunistic and value-added approaches. Tom Morgan, Co-Head of UK Healthcare at CBRE, attributed this strategic shift to the sector's resilience, robust demand dynamics, and historically long lease terms.
Beyond financial considerations, the deployment of capital into healthcare assets is underpinned by a growing emphasis on Environmental, Social, and Governance (ESG) criteria. With 86% of investors acknowledging the influence of ESG on their investment decisions, there is a concerted effort to support providers in developing their own ESG strategies, with a particular focus on ensuring defined governance controls to safeguard care quality.
CBRE's survey underscores a buoyant outlook for the UK healthcare sector, with investors, developers, and providers aligning their strategies to capitalise on burgeoning opportunities. As the sector evolves in response to demographic shifts and evolving consumer preferences, it remains poised to deliver not only financial returns but also tangible social benefits.
