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UK Care Properties Best Performing Asset Class in 2016

Healthcare property investments offered the best returns of any sector last year, says report

UK Care Sector Best Performing Asset Class in 2016 says MSCI

Property investments within the UK’s residential care sector have offered the best rental returns of any property asset class over the past 12 months, according to the latest research from investment support firm MSCI.


The index, sponsored by chartered surveyor group Aitchison Raffety, revealed that of the 1,093 healthcare properties measured in 2016, the average return reached 7.9% - surpassing all other UK property types.


Valued at a total of £5bn, the properties comprised of both primary residential care facilities such as those leased to GPs and the NHS, as well as secondary residential care properties including care homes, specialist treatment centres and private hospitals.


Achieving above the average annualised return of 7.2% over the past 5 years and 6.6% over the past decade, Executive Director at MSCI, Malcolm Hunt, said that the figures were indicative of the healthcare sector’s strength compared to other specialist and traditional asset classes.


Mr Hunt, said: ‘The index data shows that the healthcare sector has proved resilient in challenging market conditions, outperforming all other property sectors including retail, offices, industrial and residential.’


Primary residential healthcare facilities accounted for the highest proportion of returns in the sector, offering 9.3% against the 5.2% found in secondary healthcare properties – despite the secondary sector achieving a larger income return of 6.6% in 2016.

 

Regionally, growth within the residential healthcare sector across primary and secondary facilities was seen across the UK with returns of 9.3% seen in the North, the Midlands, Wales, the South East, the South West and the East.


Scotland achieved the largest returns with 9.9%, whilst London was home to the largest fall in returns – dropping from 11.6% in 2015 to 8.5% in 2016.


The popularity of specialist property investments in the UK was felt throughout the market, as the Private Rented Sector (PRS) was named the top specialist investment in 2016 by Knight Frank, following £12.7bn of investment last year.

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