Investment in the specialist property sector will exceed £10bn in 2015 and will account for 20% of total commercial volume by 2020.
The report, by Knight Frank, announced at its annual specialist breakfast this morning, says that the core specialist property sectors – healthcare, hotels, student property and automotive – account for a growing share of the commercial market.
Key factors behind the specialist sector’s rise include the UK’s ageing population, a rise in student numbers, and car sales growth, combined with increased occupier demand for high-quality property.
Care homes are set to be the best-performing asset in the healthcare sector, with a new wave of domestic and international operators set to enter the market. Mental health and learning disability properties are generally undervalued and will offer potential gains to investors, the report said.
In the student accommodation sector, the direct-let market is expected to be the best-performing segment. Deal volumes are set to rise over the next five years, with at least £3bn of transactions in established portfolios expected to take place.
The automotive sector will see yields hardening further this year, alongside rental growth. Institutional funds will continue their interest and 2015 will see the largest-ever volume of automotive investment transactions in the UK.
Darren Yates, head of global capital markets research at Knight Frank, said: “Improving occupier demand, easier access to finance and a greater willingness to move up the risk curve are increasing investors’ appetite for specialist property. Indeed, for many investors, specialist property now forms an integral part of a core portfolio.”
