A New Way To Invest In Commercial Property
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
The healthcare property sector is delivering exceptional returns for investors, with recent transactions achieving yields of 7.8% amid growing institutional interest and severe supply constraints. This compelling investment case has been further strengthened by the NHS’s announcement of a £60 million estates framework that will create significant opportunities for private capital deployment in the healthcare infrastructure space.
For high-net-worth individuals seeking stable, income-generating commercial property investments, the healthcare sector’s performance stands in stark contrast to the volatility experienced in other commercial property segments. The combination of demographic tailwinds, institutional capital flows, and government-backed infrastructure initiatives is creating a perfect storm of opportunity for sophisticated investors.
NHS Commercial Solutions has launched a £60 million framework to support estates planning, maintenance and infrastructure upgrades across the South and South-East of England. This initiative, which will initially run from December 2025 to December 2027 with options to extend up to eight years, represents a significant commitment to healthcare infrastructure development in key regions [1].
The framework is structured as an open agreement allowing suppliers to join at defined intervals, with a maximum 1% fee and surplus income distributed to member trusts. It’s designed to streamline procurement for a wide range of public bodies, including NHS trusts, local authorities, and publicly funded education institutions [1]. This inclusive approach creates multiple entry points for private capital seeking exposure to healthcare infrastructure projects.
For high-net-worth investors, this framework’s open structure provides significant advantages. The ability to join at defined intervals reduces barriers to entry, while the transparent fee structure (maximum 1%) ensures cost efficiency. Additionally, the framework’s distribution of surplus income to member trusts aligns investor interests with those of the healthcare providers, potentially enhancing relationship-building opportunities for long-term investors [1].
The predictable timeline and potential eight-year duration offers investors the long-term visibility that is increasingly rare in today’s volatile commercial property market. This structured approach to infrastructure development aligns perfectly with the needs of income-focused investors seeking assets with government-backed income streams.
This shift toward private finance schemes is part of a broader trend, as the NHS in England considers private investment to address its aging and deteriorating estate as part of a new 10-year plan. With a significant maintenance backlog of £13.8 billion, the need for substantial capital investment to modernize facilities has never been more pressing [14].
Recent market activity demonstrates the exceptional returns available in the healthcare property sector. A retail unit let to private dentist Space Healthcare was recently acquired for £490,000, generating £40,000 in annual rent—representing a net initial yield of 7.8% [2]. This transaction, completed by a private investor through commercial property agency Bond Wolfe, highlights the growing appeal of healthcare-related investments among individual investors seeking stable income streams in the current market environment [2].
The property is currently let to Space Healthcare Limited on a 10-year lease until January 2027, providing approximately 2.5 years of secured income remaining on the initial term [4]. This lease length is typical for healthcare properties, which generally benefit from longer lease terms (8-25 years) compared to standard commercial retail (5-10 years) or office properties (3-5 years), contributing to their income security and investment appeal.
When compared to other commercial property sectors, healthcare properties offer a compelling value proposition. Prime yields for index-linked grocery leases, for instance, range from 4.20% to 9.50% [3]. While grocery assets are considered relatively defensive investments, healthcare properties offer greater stability due to their essential service nature and lower vulnerability to economic cycles or e-commerce disruption.
The 7.8% yield achieved by the healthcare-related property investment sits favorably within this range, offering investors an attractive balance of income security and return potential. This yield level is particularly noteworthy given that property investors globally are seeking initial yields of 6% or higher with stable long-term rental returns [3].
High-net-worth individuals are increasingly optimistic about the UK property market, with a 2024 Investec survey revealing that 72% of HNWIs feel positive about UK real estate. The survey, which gathered insights from 382 UK-based HNWIs with investable assets of at least £3 million, found that 99% consider the UK an appealing market, with London particularly attractive to 95% of respondents. Moreover, 64% believe property values are at or near the bottom, indicating potential for growth [9]. This positive sentiment, combined with the attractive yields in healthcare property, creates a compelling investment case.
Beyond current yield considerations, healthcare properties offer significant value appreciation potential driven by technological and operational innovations. This is reflected in the dramatic increase in investment volumes flowing into the sector.
Operational Real Estate (OPRE) investment in the UK surged to £6.3 billion by Q3 2024, marking a 102% increase from 2023. Within this broader trend, the healthcare sector attracted £560 million in Q3 2024 alone, representing an 83% rise year-on-year [4]. This substantial increase in capital flows reflects growing investor recognition of the sector’s value proposition, particularly as healthcare innovations improve operational efficiency and service delivery.
The dramatic growth in healthcare property investment is underpinned by powerful demographic trends, including an aging population and increased demand for medical services [4]. These fundamental drivers create a strong foundation for continued investment interest and potential yield compression as more capital targets the sector.
Properties housing innovative healthcare providers can command premium rents and attract longer lease commitments, directly enhancing investment returns and capital appreciation potential. Specific innovations driving property values include digital health technologies that enable remote monitoring and telehealth services, requiring purpose-built spaces with enhanced connectivity infrastructure. Energy-efficient systems reduce operational costs for healthcare tenants, potentially increasing their profitability and ability to sustain higher rents. Additionally, flexible space configurations that can adapt to evolving care models allow healthcare operators to deliver services more efficiently.
As the NHS framework focuses on infrastructure upgrades and modernization, assets benefiting from these improvements will likely experience enhanced operational efficiency and service delivery capabilities, further driving their commercial value.
Perhaps the most compelling aspect of the healthcare property investment thesis is the extreme supply-demand imbalance, particularly in the care home sector. Data from March 2025 revealed that only 86 additional care home beds were created in the UK in 2024, highlighting a significant shortfall amid rising demand [5].
This supply constraint exists against a backdrop of inexorable demographic pressure, with the over-85 population projected to double by 2045 [5]. The resulting imbalance creates a powerful tailwind for healthcare property investments, positioning existing assets to experience substantial rental growth and yield compression.
For investors who can access healthcare property investments, this supply-demand dynamic offers the potential for returns that exceed the already attractive 7.8% yields currently available. The NHS framework’s focus on infrastructure development may help address critical capacity shortages while creating investment opportunities in newly developed or refurbished assets.
What strategies can investors employ to capitalize on this supply-demand imbalance? Focusing on existing assets with expansion potential or partnering with operators who have proven development capabilities can provide access to this structurally undersupplied market.
“We aim to provide shareholders with attractive and sustainable returns, primarily in the form of quarterly dividends, while also generating growth in net asset values over the medium-term,” states Impact Healthcare REIT, a company focused on acquiring care homes and diversifying its tenant base to reduce exposure to any single operator [10].
Institutional investors are increasingly recognizing the value proposition of UK healthcare properties, as evidenced by recent high-profile transactions. In March 2025, NHS landlord Assura received a £1.6 billion buyout proposal from private infrastructure investors KKR and Stonepeak Partners, representing a 32% premium over Assura’s recent closing price [6].
This substantial premium demonstrates the strong institutional appetite for healthcare property assets and validates their intrinsic value. The willingness of sophisticated private equity investors to pay such a significant premium suggests they anticipate continued strong performance from healthcare properties, potentially driven by the same factors that enable the 7.8% yields currently available to individual investors.
Ultra-high-net-worth individuals (UHNWIs) are increasingly diversifying into private equity to enhance long-term returns. On average, they allocate 21% to venture capital, 28% to growth equity, and 26% to buyouts. Healthcare is a prominent sector, with 67% of investors holding investments in this area [11]. This trend aligns with the growing institutional interest in healthcare properties and suggests that sophisticated investors recognize the sector’s potential.
For high-net-worth individuals, the challenge lies in accessing similar assets without the scale and resources of institutional investors. This is where specialist investment vehicles like SIRE Capital Partners’ Single Asset Funds can play a crucial role, providing sophisticated investors with access to institutional-grade healthcare properties through structures designed specifically for private capital.
Environmental, Social, and Governance (ESG) credentials are becoming increasingly important for investors and funders in the healthcare sector [7]. As the NHS framework specifically targets infrastructure upgrades, it will likely prioritize projects with strong ESG credentials, creating investment opportunities in assets that not only deliver attractive initial yields but also benefit from enhanced value appreciation and tenant retention due to their sustainability features.
The growing emphasis on ESG compliance in healthcare real estate creates a potential yield premium for properties that meet or exceed sustainability standards. Investors focusing on refurbishments and sustainable upgrades can enhance asset value while positioning their portfolios to benefit from the increasing institutional preference for ESG-compliant assets [7].
According to industry experts, ESG will remain a key driver for capital allocation in 2025, with the UK’s regulatory environment offering clarity and the government’s commitment to decarbonization aligning with investment priorities [7]. This regulatory clarity provides investors with a roadmap for ESG compliance, reducing uncertainty and potentially enhancing returns for properties that meet or exceed standards.
Recent research from BNP Paribas reveals that institutional investors are doubling down on ESG commitments, with 87% maintaining ESG objectives and 84% anticipating sustainability progress will accelerate through 2030 [15]. More significantly, 59% are pivoting towards thematic ESG investing, focusing on energy transition, low-carbon assets, and active ownership. For healthcare property investors, this shift signals growing demand for assets with strong sustainability credentials.
The NHS framework is expected to incorporate specific ESG criteria aligned with the UK government’s broader sustainability initiatives. These include biodiversity net gain requirements for infrastructure projects starting from May 2026, ensuring developments leave biodiversity in a better state than before [15]. Additionally, the framework will likely prioritize energy efficiency measures, renewable energy integration, and designs that enhance patient and staff wellbeing, as these align with both NHS operational goals and broader ESG objectives.
There’s a growing emphasis on sustainability and ESG-focused investing across real estate sectors. Investors are increasingly focusing on green buildings and net-zero properties, aligning with global climate change awareness and regulatory pressures [12]. This trend is particularly relevant for healthcare properties, where operational efficiency and tenant well-being are critical factors in asset performance.
While healthcare property investments offer attractive yields and defensive characteristics, investors should be aware of potential risks and challenges. Regulatory changes in healthcare funding or service delivery models could impact tenant profitability and, consequently, their ability to sustain rental payments. The NHS framework, while creating opportunities, also introduces potential political risk if government priorities or funding allocations change over its duration.
Operational complexity is another consideration, as healthcare properties often require specialized knowledge and management expertise. Properties with single tenants may face concentration risk if that operator experiences financial difficulties or regulatory challenges. Additionally, while the current supply-demand imbalance supports strong returns, any significant increase in development activity could potentially impact rental growth prospects in specific submarkets.
To mitigate these risks, investors should consider diversifying across different healthcare subsectors, conducting thorough due diligence on tenant operators, and structuring leases with appropriate inflation protection and covenant strength requirements. Working with specialist advisors who understand the unique characteristics of healthcare properties can also help navigate the sector’s complexities.
Despite these challenges, the fundamental drivers supporting healthcare property investment—demographic trends, supply constraints, and essential service nature—remain compelling, particularly when compared to other commercial property sectors facing structural headwinds.
In an environment of economic uncertainty, healthcare properties offer defensive characteristics that can enhance portfolio resilience. CBRE forecasts a 15% increase in UK commercial real estate investment in 2025, with healthcare being a key sector driving this growth [8].
With healthcare properties currently delivering yields of 7.8%, they exceed the 6% threshold many investors are seeking globally, while offering greater stability than other commercial property types due to their essential service nature and often government-backed covenant strength.
For high-net-worth individuals constructing diversified investment portfolios, an allocation to healthcare properties can provide both attractive income returns and defensive characteristics during periods of economic volatility. The NHS framework creates additional opportunities to access assets with government-backed income streams, further enhancing the sector’s appeal as a portfolio diversifier.
The integration of PropTech is transforming real estate investments, including healthcare properties. Key innovations include smart buildings and IoT for enhancing energy efficiency, AI and big data for informed decision-making, and blockchain for simplifying transactions. These technologies are not only reducing operational costs but also increasing property values as demand for tech-driven buildings rises [12]. For healthcare properties, these technological advancements can enhance operational efficiency and tenant satisfaction, potentially leading to longer lease terms and higher rental values.
For high-net-worth individuals seeking exposure to healthcare property investments, several practical approaches are available. Direct investment in smaller healthcare assets, such as medical clinics or dental practices, can provide immediate access to the sector’s attractive yields, as demonstrated by the Space Healthcare transaction achieving a 7.8% yield [2].
A recent case study illustrates this approach: a private local investor purchased a prominent retail unit in York House, one of Leamington Spa’s main shopping streets, for £490,000. The unit is currently let to private dentist Space Healthcare and generates £40,000 a year rent, representing a net initial yield of 7.8%. The sale was managed by commercial property agency Bond Wolfe and reflects strong private investor demand for prime locations in the town [2].
Pooled investment vehicles like Single Asset Funds (SAFs) offer another route, allowing investors to co-invest in larger, institutional-grade healthcare properties without requiring substantial capital commitments or specialist sector knowledge. These structures typically provide greater transparency than traditional funds, as investors know exactly which assets they are investing in, eliminating blind pool risks.
SIRE Capital Partners’ Single Asset Funds enable high-net-worth individuals to co-invest in institutional-grade UK healthcare properties. By focusing on assets aligned with NHS infrastructure projects, investors can participate in the anticipated increase in private investment in NHS facilities, potentially yielding stable, inflation-protected returns backed by long-term leases.
Listed healthcare REITs represent a more liquid option, though with potentially lower yields than direct investments. Companies like Primary Health Properties (PHP), Impact Healthcare REIT, and Target Healthcare REIT provide exposure to diversified portfolios of healthcare assets with professional management.
For those with existing commercial property holdings, restructuring commercial mortgage finance can optimize property portfolios and potentially release equity for healthcare property investments. One case study demonstrated how consolidating existing debt into a single commercial mortgage secured against a high-value London property enabled a healthcare business to purchase an additional office outright and clear existing charges on another office [14].
Tax-efficient structures, such as Special Purpose Vehicles (SPVs), can enhance net returns from healthcare property investments. These structures allow for efficient management of tax liabilities while providing a clear legal framework for co-investment opportunities.
Primary Health Properties (PHP) provides a compelling example of successful investment in healthcare properties. Founded in 1995 by Harry Hyman, PHP focused on acquiring and managing modern primary healthcare facilities. The company listed on the Alternative Investment Market in 1996 and transitioned to the London Stock Exchange’s main market in 1998. In 2019, PHP merged with MedicX Fund, creating the UK’s largest healthcare property investor with a combined portfolio of nearly 500 properties [13].
As of 2024, PHP’s portfolio is valued at approximately £3 billion, encompassing 514 healthcare-related properties across the UK and Ireland, serving 6 million patients. In 2024, PHP reported revenue of £181.7 million, operating income of £103.4 million, and net income of £41.4 million [13]. This case study demonstrates the scale and success that can be achieved through strategic investment in healthcare properties.
“PHP now holds a portfolio worth nearly £3 billion, encompassing 514 healthcare-related properties across the UK and Ireland, serving 6 million patients,” reports the Financial Times [13]. This impressive growth trajectory illustrates the potential for healthcare property investments to deliver both scale and returns for investors with a long-term perspective.
Another instructive example is Target Healthcare REIT, which launched in 2013 focusing on acquiring and managing care homes across the UK. The company has expanded through individual acquisitions and larger portfolio purchases, including Darrington Healthcare’s portfolio in 2019 and an 18-care home portfolio in 2021. As of June 2024, Target Healthcare REIT’s portfolio was valued at £0.8 billion, comprising 95 care homes [14].
Recent healthcare REIT activity further demonstrates the sector’s strength. Strawberry Fields REIT recently entered into a $59 million agreement to acquire nine healthcare facilities in Missouri, adding 686 beds to its portfolio [16]. This expansion highlights the ongoing consolidation and growth opportunities in the healthcare property sector, even beyond UK borders.
The healthcare property sector presents a unique opportunity for high-net-worth investors seeking stable, income-generating commercial property investments. With current yields of 7.8%, significant supply-demand imbalances, growing institutional interest, and government-backed infrastructure initiatives like the NHS £60 million framework, the sector offers both attractive current returns and substantial long-term appreciation potential.
“The National Health Service (NHS) in England is considering private finance schemes to address its aging and deteriorating estate as part of a new 10-year plan,” reports the Financial Times, highlighting the significant maintenance backlog of £13.8 billion and the need for substantial capital investment to modernize facilities [14]. This shift toward private investment creates compelling opportunities for investors positioned to provide capital for healthcare infrastructure development.
For sophisticated investors looking to capitalize on these opportunities, consider the following strategies:
Focus on properties with strong ESG credentials or clear pathways to improved sustainability performance
Target assets with expansion potential to benefit from the severe supply constraints in the sector
Explore investment vehicles that provide access to institutional-grade healthcare properties without requiring substantial capital commitments
Consider the integration of PropTech innovations to enhance operational efficiency and tenant satisfaction
Diversify across different healthcare sub-sectors to mitigate risk while maintaining exposure to the sector’s favorable dynamics
Conduct thorough due diligence on tenant operators and their business models to assess long-term sustainability
Evaluate tax-efficient structures like SPVs to optimize net returns from healthcare property investments
Monitor the implementation of the NHS £60M framework for specific investment opportunities aligned with government priorities
We view the current dynamics within the UK healthcare property sector as a clear affirmation of our strategic focus on secure income real estate. The compelling yields, coupled with the fundamental supply-demand imbalance and growing institutional appetite, underscore the sector’s inherent stability and long-term value potential. Initiatives like the NHS framework are not merely opportunities; they represent a significant, sustained commitment to healthcare infrastructure that aligns perfectly with our mandate to provide investors with access to assets backed by robust covenants and predictable income streams. We are confident that the defensive characteristics of healthcare property, driven by demographic tailwinds and essential service provision, position it as a cornerstone for sophisticated investors seeking resilience and attractive returns amidst economic uncertainty.
Accessing these institutional-grade opportunities requires specialist expertise and a commitment to transparency. We believe that structures which eliminate blind pool risk and offer direct insight into the underlying assets are paramount for high-net-worth individuals. Our approach is designed precisely for this, providing a clear pathway to participate in the growth and stability of UK healthcare property. We see the increasing emphasis on ESG credentials and the integration of technology not as optional extras, but as essential drivers of future asset performance, and we ensure our investment considerations reflect this. We remain steadfast in our belief that focusing on quality assets, professional management, and transparent structures is the most effective way to capitalise on the compelling opportunities this sector presents.
Patrick Ryan is a Principal at SIRE Capital Partners with 20+ years in London’s property sector. His healthcare real estate expertise stems from founding a mezzanine finance business in 2003 and later heading SIRE Properties. At SIRE Capital Partners, Patrick leverages his specialist knowledge to provide sophisticated investors with access to institutional-grade healthcare property opportunities.
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
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- Khalid Hussain (Clinical Director at Todays Dental Group)
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