Investment in the UK’s healthcare sector has doubled year on year, according to new research from Savills.
The agency said more than £3bn changed hands in the sector in 2019, up from the £1.5bn invested in 2018.
Savills said the rise was because of continued appetite from UK institutional investors and REITs, which were attracted to the long leases and indexed rental uplifts in the sector. Overseas buyers also showed a renewed interest in healthcare assets, it added.
Private hospitals were the most popular with investors, accounting for almost 70% of total healthcare transactions.
This included US REIT Medical Properties Trust’s acquisition of 30 private hospitals for £1.5bn. The business bought another eight private hospitals from Secure Income REIT for £347m.
“In a world where we are seeing changing occupier behaviour result in shorter leases in the mainstream commercial property market, healthcare assets continue to offer the longer-term lease lengths and inflation-linked rents that pension funds find so attractive and is a key reason why the market has seen such a significant increase in interest from REITs, as well as the emergence of specialist healthcare REITs,” said Savills’ head of healthcare, Craig Woollam.
“Over the past year we have seen the spread of investors into the healthcare market become more international. While the US were particularly dominant, we also saw capital come from Europe, the Middle East and Asia, all of which are now competing with domestic money for buying opportunities.”