Types of Commercial Property: Healthcare Property Investment
Healthcare properties can be excellent investments for property owners, landlords and investors alike, either as their strategy or as part of a diverse property portfolio.
Are you looking to enter the healthcare property market and find potential property purchases with excellent rental yields? That’s something we can help with.
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What Is A Healthcare Property Investment?
A healthcare property is designed explicitly for healthcare-related purposes and is usually built to accommodate medical facilities, such as hospitals, clinics, nursing homes, assisted living facilities, medical office buildings and rehabilitation centres.
Landlords and investors within the healthcare property market may own, rent out, or manage the healthcare properties, to both public and private healthcare providers.
What Are The Common Features Of A Healthcare Property Investment?
Healthcare properties will usually have unique features to meet the specific needs of healthcare providers and patients, such as advanced medical equipment, patient care areas, diagnostic facilities, surgical suites and administrative spaces.
Additionally, healthcare properties may have specific building regulations to ensure healthcare services’ safety, functionality and compliance.
Why Should Invest In The Healthcare Property Sector?
You should invest in healthcare property because the healthcare sector is vastly growing in the United Kingdom due to numerous reasons, including:
The number of people aged 65 or over will increase significantly over the next decade. Between the 2011 census and the 2021 census, the over-65 population grew by 2.2% of the total population.
Over 65s tend to suffer from a greater incidence of illness/disease and need public and private healthcare services.
Strong Healthcare System
The UK has a robust healthcare system comprising public and private healthcare providers. The National Health Service (NHS) ensures universal access to healthcare services, creating a consistent demand for healthcare facilities and services.
The UK government recognises the importance of healthcare infrastructure and has committed significant funding to the sector.
Investments in healthcare properties may benefit from government initiatives, funding programs and public-private partnerships to expand and upgrade healthcare facilities.
Attractive Investment Returns
Healthcare properties in the UK can offer competitive rental yields and potential capital appreciation. The stable demand, long-term leases, and the specialised nature of healthcare properties often translate into favourable financial returns for investors.
Investing in healthcare properties can provide diversification within a property market.
Healthcare assets are generally considered non-cyclical, meaning they are less correlated with economic cycles and may provide stability during periods of market volatility.
Are Healthcare Properties Profitable?
Healthcare property investments can offer stable returns and long-term income streams due to the consistent demand for healthcare services. Most healthcare property tenants will be privately owned medical providers looking to set up roots over extended tenancy agreements.
The growth of the healthcare industry, population demographics and advancements in medical science and technology contribute to the attractiveness of healthcare properties as investments.
Which Sector Of The Healthcare Market Is Growing The Most?
With house prices still unattainable for many young people, the demand for affordable rented accommodation remains strong.
HMOs are often very popular within urban areas, as some landlords decide to let the entire properties out to the local council as low-cost housing by taking a discount but gaining a consistent income.
Students are always a safe bet with HMOs as they have a set course length, enabling you to have long-term tenants and plan for when their courses end. However, they can cause disruptions due to partying and noise.
Young professionals rent much later, into their 20s and 30s, as they cannot climb onto the property ladder. They tend to be slightly tamer than students and more mature.
Is It A Good Idea To Buy A Healthcare Property Investment?
It may be a good idea to buy a healthcare property investment, but first, we recommend speaking with our team and a financial advisor to weigh how much risk you are willing to take on.
Healthcare is essential to society, and the demand for medical facilities remains relatively stable regardless of economic conditions.
The ageing population in many countries and couples with longer life expectancies increased the demand for healthcare services. This demographic shift creates a sustained need for healthcare facilities and can contribute to the profitability of healthcare properties.
Healthcare providers often sign long-term leases for their facilities, providing stability for property owners. These leases can span several years, offering predictable income streams and reducing the risk of vacancies.
Healthcare properties represent a specialised sector within the housing market, creating a potential barrier to entry for competitors.
The specific regulatory requirements and expertise needed to operate healthcare facilities can limit the number of players in the market, potentially leading to further reduced competition and increased profitability.
Who Are The Best Tenants For Healthcare Properties?
When it comes to healthcare properties, several types of tenants are typically considered desirable due to their stability, long-term leases, and potential for reliable rental income:
National Health Service (NHS)
In 2019, the NHS rented 70% of the commercial healthcare properties in England. They operate various medical facilities, including hospitals, clinics, and specialised healthcare centres.
Private Healthcare Providers
Private healthcare providers play a significant role in the UK healthcare sector, offering services to individuals who opt for personal medical care.
Medical Clinic Centres
Various medical clinic chains operate in the UK, usually in fields such as Dermatology, Orthopedics, Sexual Health, Fertility, or Mental Health. These clinic chains often have multiple locations and can be reliable tenants for healthcare properties.
Diagnostic Imaging Providers
Diagnostic imaging centres such as radiology clinics or MRI centres provide essential medical imaging and diagnostics services. These facilities require dedicated space, specialised equipment and qualified staff.
Dental offices and practices are an integral part of the healthcare landscape in the UK. Dental practitioners, both NHS and private, operate dental clinics across the country.
Care Home Operators
With the ageing population in the UK, care homes and assisted living facilities are in demand, with care home operators needing to provide residential care for the elderly.
Why A Healthcare Property Might Be A Good Investment For You
As with any property investment, a particular aspect of risk is involved, so weighing up the advantages and disadvantages of Healthcare property investments is essential.
What Are The Advantages Of Healthcare Property Investments?
Healthcare providers such as hospitals, clinics, and medical practices often sign long-term leases for healthcare properties.
These leases usually span several years, providing investors with predictable cash flows and reducing the risk of vacancies.
The healthcare industry is experiencing long-term growth due to population ageing, advances in medical tech and increased focus on wellness.
The growing demand for healthcare services translates into increasing demand for healthcare properties.
Healthcare property investments generate stable and recurring income streams. The demand for healthcare services remains relatively consistent as people require medical care regardless of economic conditions.
This stability can provide reliable rental income for investors.
What Are The Disadvantages Of Healthcare Property Investments?
The healthcare industry is heavily regulated, and healthcare properties must comply with numerous regulations and standards.
Investing in healthcare properties often requires specialised knowledge of the healthcare industry, including an understanding of medical facilities, healthcare operations, and the specific needs of healthcare providers.
Healthcare property investments are dependent on securing and retaining suitable healthcare tenants.
Tenant turnover can disrupt cash flows and require suitable healthcare tenants. Tenant turnover can disrupt cash flows and require time and resources to find new tenants.
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What Are The Different Types Of Healthcare Investment Properties?
Many types of healthcare property investments can be categorised into four service facilities; elderly care, adult care, health services and childcare.
The need for healthcare investment properties remains consistent across all categories.
What Is An Elderly Care Property Investment?
Elderly care usually comes in nursing homes with specialised niche opportunities like dementia care, personal care homes, and senior living & assisted living.
What Is A Childcare Property Investment?
Childcare facilities usually include specialist education schools, children’s residences, and children’s nurseries.
Special Education Needs (SEN) is dominated by for-profit providers, who account for 75% of the market.
What Is A Health Services Property Investment?
Health services usually come from hospitals like UK private hospitals, primary care GP clinics, pharmacies and dentists.
Health service properties have lower yields than other categories of healthcare properties, mainly because many GPs turned towards telephone appointments during the pandemic, and the use of large GP centres became unutilised.
What Is An Adult Care Property Investment?
Adult care facilities usually include adult care homes through early onset dementia care, ABI rehab, mental health facilities and supported living accommodations.
They tend to target patients between 18 and 64 and are led by independent operators who account for over 90% of the market.
How Easy Is It To Find A Property?
Finding a property to buy and convert a building into a healthcare investment or buy an existing one has never been easier!
At The Property Sourcing Company, we pride ourselves on being able to match you with tailored property straight to your inbox.
All you have to do is join our database, which is entirely free, and we will contact you to discuss your requirements. Then if we have an existing property that matches your described criteria, we will send it straight to you.
If you don’t match immediately, don’t worry! With hundreds of properties being added to our database annually, opportunities are just around the corner!
Our service doesn’t just stop there; once you have matched with the property, we will help you negotiate any deals and help you at every step.
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What Alternatives To Commercial Property Investments Are There?
Office & Retail Investments
Office properties tend to be commercial buildings or spaces designed for corporate headquarters.
Retail investments tend to be used for selling foods and services directly to consumers.
Industrial property investments are used for manufacturing, production, storage, distribution, research or development businesses.
Land development refers to the purchasing of undeveloped or underdeveloped land with the intention of transforming it into a developed property.
Leisure Property Investments
Land development property investments tend to be used for recreational or leisure facilities like gyms, spas, hotels, theatres.
Mixed-use property developments tend to be a mix of retail and Buy-To-Let residential properties.
Why Invest With Us?
We’ll find you the best deal, with the highest yield possible, tailored to your requirements.
We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.
We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio.
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You might be wondering where we are able to offer these fantastic Buy To Let opportunities with great yields, and the answer is pretty much anywhere in England and Wales. We’ve detailed below some of the main areas that we regularly buy properties in, just to give you an idea.
Buy To Let Investment Examples
When we say that we can source properties that offer a high yield, you don’t just have to take our word for it. Below you will find some of the properties we’ve recently sold to our investor database and their example yields: