The UK healthcare sector will become an increasingly popular target for capital in 2017, as alternative assets become more mainstream for investors in search of attractive yield returns, according to Cushman & Wakefield.
Martin Robb, who leads Cushman & Wakefield’s Healthcare Advisory team, said recent capital inflows including lenders, hedge funds and US REITs, as well as a more competitive landscape among domestic institutions, has cemented healthcare as a recognised property investment class with the trend set to continue in 2017.
Martin joined Cushman & Wakefield earlier this year to establish the healthcare practice which since its inception, has advised on more than €1.2bn (£1bn) of assets comprising approximately 10,000 beds.
Looking ahead to next year, he said: “Sector operators, as well as funds, will be eyeing acquisitions across primary and long-term care in the next 12 months. There is a definite sense that sub-sectors in the market, such as long-term care, have turned an operational corner. While all well-advised buyers keep a close eye on specific metrics within the trading environment, such as staff shortages and pay rates in particular, there is a balancing item that a loss of provision in the market over a number of years is now starting to assist better quality operators with well-managed businesses.
“In addition, the established polarisation of the long-term care market is set to be maintained, with strong interest in the private pay market, while the mid-market or publicly-funded product is expected to see a focus upon asset refurbishment and improvement where financially viable. Overall, the industry remains needs-driven with suitably-priced businesses still generating realistic returns. Conversely, the continued unravelling of some over-leveraged positions, dating back in some cases over ten years, creates further opportunity.”