The long leaseholds and reliable income provided by care homes are attracting strong post-Brexit vote investor interest, research has found.
Property consultancy’s Knight Frank latest Health Capital Markets report found that the defensive quality of care home assets had made the sector attractive in the uncertain Brexit climate.
Knight Frank said: “Thus far in 2016, given the uncertainty of the markets, UK healthcare fixed income appears to be holding up well. Anecdotal evidence from lenders and investors is that the defensive characteristics of the sector will potentially make it the leading commercial asset to invest in. Time will tell.”
UK healthcare provided a 10.4% return for investors in 2015, the first double-digit return in five years.
Transactions were relatively subdued in the first half of 2016, caused by uncertainty in the run-up to the Brexit vote, with £92m worth of healthcare facilities changing hands in the period.
Knight Frank said activity had remained subdued in the aftermath of the Brexit vote but fundamentals were sound, buoyed by the sustained interest of US buyers consolidating their position in the UK sector through M&A activity.
Despite the slowdown in the first half of 2016, Knight Frank said institutional interest in the healthcare sector remained strong, with investors attracted by its stable long term index linked income.
Rising demand due to the ageing UK population provides a sound outlook for the sector. The report highlights that the number of over 80s is set to double over the next 25 years and that increased average life expectancy had led to ever rising occupancy levels, which were up to 88.3% in 2014/15.
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