The market for UK care assets continues to pull the attention of both domestic and overseas investors due to its strong demand drivers, such as long leases and an ageing population. This year’s report focuses on the healthcare investment market trends from the past year and covers our thoughts for the year ahead.

Given the various factors impacting the sector, it was extremely important to drill down into investors’ sentiment to truly understand the state of the market. Therefore, we have surveyed several key UK market players, including major REIT, institutional and overseas investors, to gain a comprehensive insight into the current state of the sector. An additional Q&A with John Flannelly of Target Fund Managers sheds further light on investors’ experiences with healthcare exposure.

Summary

Although transaction volume did not see the highs recorded in 2020, it was not far behind, totalling £2.34bn across the sector, this like 2020’s volume was aided by a major transaction in the form of Medical Properties Trust’s acquisition of a portfolio of Priory homes by way of sale and leaseback.

Overseas capital remained a key factor in 2021, accounting for 51% of transaction volume with a mix of European operators and REITs entering the market with acquisitions within the elderly care space.

Average annualised returns sat at 9.50% at the end of Q4 21, once more aiding the case for the sector’s stability and return potential. This along with many of the other sector fundamentals adds support to the trend of investors pivoting away from conventional classes into the alternatives.

ESG continues to feature in the decisions of investors and their allocation of capital. Demand for sustainability has kept its momentum, strengthening the case for initiatives such as green finance amongst other ESG strategies.

Overall, the investor caution seen early on during the pandemic seems to have passed and there is a generally positive sector sentiment. Therefore, the outlook for healthcare is positive, and we can expect an active market for care assets in 2022.

We hope you find the report of interest. If you would like further information please get in touch.

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