A guide to care home investments

When it comes to commercial property investments, care homes are a new trend. This is a completely different investment to buy-to-let and it is growing at a pace that is encouraging solid returns.

The UK population is living to an older age and this has led to investors taking an interest in as they look for new ways to generate income.

carehomeThe Office for National Statistics has released data that shows 18% of the population is over the age of 65. This is a figure that is expected to grow to 25% by 2044, while the number of people living beyond 75 is also on the increase.

As the number of elderly people in the UK increases, so does the requirement for long-term care. It is predicted that over the next 50 years there will need to be a 150% increase in residential and nursing home places and an increase of 140% in the number of home care hours.

Around 61% of NHS beds are occupied by patients who are waiting for a bed in a care or residential home and this costs the NHS £250 per day. This highlights the importance of residential or care home developments in order to relieve the burden on the NHS.

In recent years, the money put forward for this has decreased as figures show that between 2005 and 2014 the amount of funding decreased by 18%. This means that the sector is short in every aspect and that the lack of funding has opened up opportunities for private investors to take advantage of the situation the sector finds itself in.

During 2014, there were more that £4.5 billion of deals completed in the sector and this shows that this is an asset that is certainly sustainable.

In fact, healthcare property performs better than any other commercial property asset as returns have increased by 3.4% which is more than double that of all other property.

Since the healthcare index launched in 2007, the returns have been consistent and this shows that it is a stable market with high demand and a great risk to reward ration.

A survey was carried out in 2015 by Knight Frank of the 69 top investors, developers and lenders in an attempt to ascertain how attitudes changed towards specialist property investments.

When they were questioned about the sector they were going to target next, 7 out of 10 responded by stating that they had an interest in the UK healthcare sector. This shows that investors have certainly changed their focus to specialist assets as they look to contribute to the potential growth of the care sector.

The demand for this sector is sustainable and the returns are higher than any other class. Care home property investments are going to grow exponentially in the next few years with attractive developments such as Latimer Lodge in Yeovil and Gateshead Care Home offering returns of up to 10% guaranteed for 10 years,as investors look to make shrewd investments in a market that almost guarantees returns.

As the population is living longer it seems that this is a market that could continue to grow for decades.