Significant Appetite for Growth Across Healthcare Sector

• Investors, developers and providers all anticipate sector growth over the next five years

• Regions including the Midlands and East of England pipped for growth to tackle undersupply

• Development pipeline insufficient to meet investor demand in six of eight subsectors, including Specialist Care Homes, Private Acute Hospitals and Senior Living

Investors, developers and providers are looking to significantly increase their presence in the UK healthcare sector, according to CBRE’s 2024 UK Healthcare Sentiment Survey*.

CBRE’s research shows that all respondent pools anticipate sector growth, with 62% of investors intending to increase their allocation to healthcare, 70% of developers preparing to take on more healthcare projects and 50% of providers planning to grow their portfolios over the next five years.

When asked about anticipated demand levels across the UK, 40% of both developers and providers expect London to have the greatest demand for care services, due to being densely populated, highly affluent, and having limited new care home developments. However, developers are also looking to the Midlands and the East of England to address the acute undersupply in these regions, while capitalising on lower competition risk.

Despite unified appetite for growth, the findings show disparities between the healthcare assets investors are targeting and those that developers are building in all but two subsectors; Supported Living and NHS Leased Facilities. This was particularly prevalent in Senior Living, with 44% of investors targeting these assets and just 24% of developers bringing them to market, likely a result of market immaturity and unclear senior living policies from local authorities. 

The challenging development environment, abated by long planning timelines, cost inflation and land availability, has also driven a shift in approach from providers, with just 18% looking to acquire new schemes. Instead, providers are looking to acquire existing care homes, either alongside new developments (60%) or as a standalone strategy (23%).

The search for attractive returns, high occupancy rates and strong fee-rate rises has seen investors pivot from income driven strategies to opportunistic and value-add, with 84% of respondents stating their appetite for risk had increased.