The global healthcare sector remains buoyant and is expected to grow despite a challenging economic outlook, according to global property advisor, Knight Frank.
Investors remain confident in the long-term opportunities presented by the sector, with investment in care related real estate reaching $38 bn (€35 bn) in the year to June 2023, accounting for 4.3% of total global real estate investments.
This comes as the global population shifts rapidly towards an ageing demographic, which is anticipated to drive demand for elderly care beds, particularly for full-time nursing care delivered in specialised facilities. Investors have seized upon this trend, with North American capital contributing almost 68% of the funds deployed in the past year, while France and Belgium attracted the highest levels of cross-border investments.
Among different buyer types, private capital emerged as the most active purchaser overall. However, when considering net purchases, cross-border investors, institutions, and REITs were the dominant net buyers. Key players in this market include companies such as Healthcare Realty Trust, Welltower, and Aedifica.
In the Eurozone, the population aged 75 and over is expected to grow by 26% in the next decade. Investors have been quick to capitalize on the continent’s rapidly ageing population, with one of this year's most significant acquisitions in the region involving BNP Paribas REIM purchasing a portfolio in Flanders, valued at €100 mln.
In the UK, supply of senior living facilities remains low. Increasing wealth within the growing over-65 segment of the population is resulting in more informed housing and lifestyle choices. Yet the delivery of age-appropriate housing for seniors continues to lag potential need. Just 8,000 new seniors housing units were built in 2022 across 145 schemes.
As these interrelated trends continue, the proportion of seniors within the consumer class is expected to increase rapidly, and their role in the economy will become increasingly significant.
Julian Evans, partner and head of Healthcare at Knight Frank said: 'Broad in its coverage, the case for investment in the healthcare sector remains consistent not only across its various subsectors but also across geographic borders. Supported by an ageing population across the globe and shifting demographic trends, the healthcare sector is seeing increased demand for long-term care facilities. Furthermore, as private equity, REITS and institutional investors continue to chase the strong, long income generated, there is growing interest in healthcare’s capabilities to aid ESG investing strategies.'
