Investors, developers and operators are looking to grow their presence in the UK healthcare sector, according to the CBRE 2024 UK Healthcare Sentiment Survey.
The consultancy found that 62% of investors are intending to increase their allocation to healthcare, 70% of developers are preparing to take on more healthcare projects and 50% of service providers in the sector are planning to grow their portfolios over the next five years.
The research also showed the senior living market is set to heat up quickly, with 44% of investors targeting these assets and just 24% of developers bringing them to market.
According to CBRE, the development pipeline is held back by market immaturity and unclear senior living policies from local authorities.
Just 18% of healthcare facilities operators are looking to acquire new schemes due to the development environment, abated by long planning timelines, cost inflation and land availability.
Instead, providers’ sentiment has shifted towards acquisition of existing care homes, either alongside new developments or as a standalone strategy.
Sarah Livingston, co-head of UK healthcare at CBRE, said: “Providers want to grow their portfolios to support the provision of much needed care beds in a number of subsectors, notably senior living and specialist care.”
The survey showed 40% of both developers and providers expect London to have the greatest demand for care services, due to being densely populated, highly affluent, and having limited new care home developments.
Elsewhere, developers are also looking to the Midlands and the East of England to address an undersupply in these regions, while capitalising on lower competition risk.
Tom Morgan, co-head of UK healthcare at CBRE, said: “Healthcare is a resilient asset class – it offers robust demand levels and traditionally, long lease terms.
“However, not all investors can adopt a ‘wait and see’ approach and as a result, we’ve seen many becoming less risk averse in order to deploy capital.
“They’re now taking advantage of the opportunity afforded by shorter leases, rather than focusing on income duration.”
In the CBRE survey, 84% of respondents stated their appetite for risk had increased as they search for attractive returns, high occupancy rates and strong fee-rate rises.
CBRE’s 2024 UK Healthcare Sentiment Survey analysed responses from over 200 investors, developers and providers across the UK.
Investor respondents have a combined investment of over £8bn, and provider respondents have over 150,000 care home beds, collectively.
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