The healthcare real estate market is set to enjoy a flurry of activity this year, according to a major new survey of investors, lenders, operators and developers.
CBRE’s latest healthcare market and sentiment survey has found that investors are particularly bullish about the sector’s future, despite the economic uncertainties of Covid-19, with 88% of them agreeing that the demand for healthcare real estate will continue to rise in the short and medium term.
Elderly care and retirement living assets were the most popular with investors, with 69% of respondents predicting that the retirement living sector will see the greatest investor demand this year.
“Investment interest in the healthcare sector has been growing year on year over at least the last five years”, says Tom Morgan, head of healthcare at CBRE. “Healthcare businesses have remained open and occupancy has been incredibly strong when compared with other asset classes such as hospitality or even student housing.”
Roughly 60% of developers said Covid-19 had not impacted development strategy, while 72% of lenders said they wanted to increase their exposure to healthcare assets.
Among operators, 60% said it would take one to two years for occupancy levels to recover to pre-Covid levels. However, Morgan says that some operators are forecasting that “occupancy levels may return to pre-Covid thresholds by late summer, early Autumn this year”.
Morgan believes the sector will remain strong. “The resilience demonstrated in the last 12 months will continue and new models of care will emerge, with health and social care taking an increasingly important position in the resurgence of our towns and high streets.”
Respondents also largely agreed that prices in the sector would strengthen, with more than 50% saying they expected a sharpening of healthcare yields.