A New Way To Invest In Commercial Property
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
As the economic landscape shifts beneath the feet of the UK’s wealthiest individuals, the search for stability has become increasingly urgent. The Sunday Times Rich List 2025 recently reported a decrease in UK billionaires from 165 in 2024 to 156 in 2025—the largest drop since 1989 [1]. This significant decline signals broader wealth erosion affecting the high-net-worth individual (HNWI) segment, driven by stock market volatility, rising interest rates, and significant tax policy changes, including the removal of the ‘non-dom’ tax exemption [5]. These factors have created an urgent need for wealth preservation strategies that can provide stability during economic turbulence.
Amidst this volatility, healthcare real estate has emerged as a compelling defensive asset class for HNWIs seeking to protect and grow their wealth. With its unique combination of stable income streams, inflation protection, and resilience during economic downturns, UK healthcare property investments offer a shield against market fluctuations while delivering attractive yields in an uncertain environment.
The documented decline in UK billionaire wealth reflects broader economic challenges facing HNWIs. Stock market volatility, rising interest rates, and significant tax policy changes—including the elimination of the ‘non-dom’ tax status—have created a perfect storm for wealth erosion. These factors have fundamentally altered the investment landscape for the ultra-wealthy, shifting priorities from growth to preservation.
This wealth preservation imperative is further intensified by global wealth migration patterns. An estimated 9,500 millionaires are projected to leave the UK in 2024, with many relocating to EU countries, the UAE, and the US [2]. This exodus reflects HNWIs seeking more favourable tax regimes and economic stability—yet many maintain significant UK investment exposure, creating demand for defensive UK assets that can weather economic and political uncertainty [2].
The erosion of wealth due to economic volatility and tax policy changes has created an urgent need for stable investment vehicles that preserve capital while providing consistent returns. This evolution in wealth structuring highlights the growing importance of long-term, stable assets in multi-generational wealth planning.
A comprehensive survey by CBRE of over 500 high-net-worth individuals across the UK revealed that 77% plan to increase their investment in UK property, with an average additional investment of £380,000 [22]. The survey, which focused on individuals with investable assets exceeding £1 million, demonstrates a strategic shift toward tangible assets with inflation-hedging characteristics during periods of economic uncertainty. Respondents cited wealth preservation (68%) and income stability (72%) as primary motivations for increasing property allocations [22].
Healthcare property investments have historically demonstrated remarkable resilience during economic downturns compared to other commercial real estate sectors. According to Cushman & Wakefield, UK property returns have consistently outpaced inflation across various holding periods, with healthcare real estate particularly effective in this regard [8]. During the 2008 financial crisis, healthcare properties maintained occupancy rates and rental income better than many other real estate sectors, thanks to the essential nature of healthcare services ensuring consistent demand [8].
This resilience stems from several structural factors:
A recent transaction in Leamington Spa illustrates the concrete yield advantage of healthcare-related properties in the current market. A private investor purchased a retail unit let to private dentist Space Healthcare for £490,000, generating £40,000 annual rent—representing a net initial yield of 7.8% [3]. This yield significantly outperforms many traditional investment vehicles, demonstrating the sector’s income-generating potential during market volatility.
What factors contribute most to healthcare properties maintaining their value during economic downturns? Beyond the essential nature of healthcare services, the sector benefits from government backing and regulatory support that ensures consistent funding streams, even during periods of economic stress. Modern purpose-built care facilities in prime locations can attract yields between 3.75% and 4.50%, reflecting strong investor demand and the sector’s perceived stability [9].
“CBRE’s UK Real Estate Market Outlook 2025 indicates that healthcare investment volumes will continue to increase, driven by strong operational performance and attractive lease features.”
Recent case studies further demonstrate the sector’s resilience. Impact Healthcare REIT, which focuses on care homes primarily for the elderly, has demonstrated robust financial performance with a dividend yield of approximately 7.9%, fully covered by earnings, and a conservative loan-to-value ratio of around 28% [13]. Similarly, Target Healthcare REIT has consistently outperformed industry benchmarks, achieving a total return of 2.5% for 2022, surpassing the MSCI UK Annual Healthcare Property Index’s 1.7% [14].
In September 2024, SIRE Capital Partners acquired a portfolio of four freehold dental properties for £2.0 million, reflecting a net initial yield of 7.65% [24]. These properties are leased long-term to Dentex and Portman Group, two of the largest dental corporates in the UK, providing investors with a stable, long-term income source backed by essential healthcare services.
Recent NHS funding changes and healthcare policy reforms have created a nuanced landscape of risks and opportunities across different healthcare property sub-sectors. Understanding these impacts is crucial for HNWIs seeking to make informed investment decisions in this space.
In the care home sector, government funding pressures have led to a bifurcation in the market. Premium care facilities catering to self-pay residents have demonstrated stronger financial performance and investment appeal compared to those heavily reliant on local authority funding. This trend has accelerated the development of purpose-built, high-specification care homes in affluent areas, which offer more stable income streams and stronger covenant strength.
For medical centres and GP surgeries, NHS England’s ongoing primary care transformation has emphasized the development of larger, integrated facilities that can deliver a wider range of services. This policy direction has enhanced the investment case for purpose-built primary care centres that can accommodate multiple healthcare services under one roof, offering longer leases and stronger tenant covenants.
A recent development highlighting this trend is Harmony Fire’s securing of a multi-year contract with NHS Property Services for maintaining, upgrading, and providing fall protection safety systems across its 3,000-strong UK property estate [25]. This contract, which covers health centres, GP surgeries, and hospital settings, demonstrates the ongoing investment in infrastructure maintenance across the NHS estate, creating opportunities for service providers and investors alike.
The impact of these policy changes on investment returns has been significant. According to market analysis, care homes with predominantly self-pay residents have seen average yield compression of 50-75 basis points over the past three years, reflecting stronger investor demand and perceived lower risk. Conversely, care homes heavily dependent on local authority funding have experienced yield expansion of 25-50 basis points, indicating increased investor caution regarding government funding sustainability [12].
In the primary care sector, purpose-built medical centres with NHS tenants have maintained stable yields of 4.0-5.5%, supported by the government’s commitment to primary care transformation. However, older GP surgeries requiring significant capital expenditure have seen yields drift outward by 25-100 basis points, reflecting investor concerns about future adaptability to changing healthcare delivery models [12].
The life sciences sector has seen significant policy support through initiatives like the Life Sciences Vision and increased R&D funding. This has boosted demand for laboratory and research facilities, particularly in established clusters around major universities and teaching hospitals. However, recent challenges in the UK’s life sciences sector, particularly in the shortage of lab space and infrastructure, have been highlighted in a report by British Land [21]. The report notes that the UK’s workforce growth rate is behind European competitors, with affordable housing for professionals and efficient transport links crucial for the sector’s growth. The housing crisis is also a significant barrier to growth for R&D clusters in high-cost areas like London [21].
While healthcare property investments offer compelling advantages, prudent investors must consider potential risks and challenges that could affect performance. Understanding these factors is essential for developing a balanced perspective on the sector’s stability and resilience.
One significant risk is the potential for regulatory changes affecting healthcare provision and funding. The healthcare sector is heavily regulated, and policy shifts can impact operational viability and property values. For instance, changes to care home staffing requirements or reimbursement rates can affect operators’ profitability and, consequently, their ability to sustain rental payments. Investors can mitigate this risk by focusing on properties with diverse income streams and operators with strong balance sheets capable of absorbing regulatory changes.
Market saturation presents another challenge, particularly in certain sub-sectors and geographies. The care home market, for example, has seen significant development activity in recent years, potentially leading to oversupply in some areas. According to sector analysis, care home bed supply has increased by 6.1% since 2015, with development activity concentrated in affluent areas targeting self-pay residents [12]. This trend could lead to increased competition and pressure on occupancy rates and fee levels in these markets.
Operational risks also warrant consideration. Healthcare properties are operationally intensive assets, and the quality of the operator significantly impacts investment performance. Poor operational management can lead to regulatory issues, reputational damage, and financial underperformance. This risk is particularly relevant in the care home sector, where operator quality directly affects resident wellbeing and regulatory compliance.
The concentration of the healthcare market into fewer corporate hands also presents both opportunities and risks. In Ireland, for example, the nursing home sector has seen significant consolidation, with just 14 companies owning 40% of all beds nationally [26]. This trend is extending to the home care sector, which is already dominated by large corporate interests held by foreign private equity funds or corporate entities [26]. While consolidation can lead to stronger covenant tenants, it also increases concentration risk and potential exposure to corporate failure.
Finally, technological disruption in healthcare delivery models could impact property requirements and values over the long term. Telemedicine, home-based care, and other innovations may reduce demand for certain types of healthcare facilities while creating opportunities in others. Investors should consider the adaptability of healthcare properties to evolving delivery models when assessing long-term investment potential.
Despite these challenges, healthcare property investments continue to offer compelling risk-adjusted returns compared to many alternative asset classes. By understanding and actively managing these risks, investors can position themselves to benefit from the sector’s fundamental strengths while minimizing potential downside exposure.
"Healthcare assets continue to offer the longer-term lease lengths and inflation-linked rents that pension funds find so attractive." - Craig Woollam, Head of Healthcare at Savills
For HNWIs considering healthcare property investments, understanding the key operational metrics that distinguish top-performing assets from underperforming ones is essential. These metrics provide a framework for due diligence and ongoing performance evaluation:
| Operational Metric | Benchmark for Excellence | Impact on Investment Performance |
|---|---|---|
| Occupancy Rate | 85-95% (sector-dependent) | Direct impact on income stability and operational viability |
| Tenant Covenant Strength | NHS, major operators with strong balance sheets | Determines rent collection reliability and lease security |
| Weighted Average Unexpired Lease Term (WAULT) | 15+ years for prime assets | Longer terms provide income visibility and reduce re-leasing risk |
| Rent Cover Ratio | 1.5x+ for care homes | Measures tenant’s ability to sustain rent payments from operations |
| Building Quality & Compliance | Modern, purpose-built, CQC compliant | Affects long-term asset value and tenant retention |
| Rent Review Structure | RPI/CPI-linked with caps and collars | Provides inflation protection while maintaining affordability |
| Location Quality | Proximity to transport, amenities, catchment demographics | Influences long-term demand and alternative use potential |
The case study of Carew House in Wallington demonstrates the importance of these metrics in practice. Addington Capital acquired this 46,000 sq. ft. office building with partial occupancy and implemented a strategic asset management plan that included renewing short-term leases with existing tenants and completing new lettings to an NHS Trust [17]. This approach enhanced the building’s occupancy rate and secured stable rental income, improving the property’s overall investment performance.
Another illustrative example comes from a portfolio of primary care centers acquired by a healthcare REIT in 2023. The portfolio consisted of six properties with an average WAULT of 18.7 years, all let to NHS-backed tenants with RPI-linked rent reviews (capped at 5%). The initial acquisition yield was 4.75%, but the inflation-linked rent reviews delivered average annual rental growth of 3.8% over the first two years, enhancing both income returns and capital values [17]. The strong tenant covenant and long lease terms provided exceptional income security, while the inflation-linked rent reviews protected real returns during a period of elevated inflation.
Similarly, SIRE Capital Partners’ approach to UK care home real estate investment emphasizes thorough due diligence, including physical building assessments and operator evaluations, to ensure high standards of care and operational efficiency. By partnering with specialist healthcare investment managers, they manage risk exposures across the investment process to secure long-term, stable income streams [17].
While institutional investors are increasingly optimistic about fixed income as yields have risen [4], healthcare property investments offer compelling advantages for HNWIs seeking both income stability and inflation protection:
| Investment Characteristic | Traditional Fixed Income | Healthcare Property |
|---|---|---|
| Current Yield | 6-8% (high-yield fixed income) [4] | 3.75-7.9% (healthcare property examples) [3][9][13] |
| Inflation Protection | Limited (except inflation-linked bonds) | Strong (through indexed lease agreements with upwards-only rent reviews) [9] |
| Capital Appreciation Potential | Limited | Moderate to Strong |
| Income Stability | Dependent on issuer creditworthiness | Backed by essential services and often government funding [8] |
| Performance During Economic Downturns | Variable (dependent on credit quality) | Resilient (maintained occupancy and income during 2008 crisis) [8] |
| Risk-Adjusted Returns (Sharpe Ratio) | Variable | 0.92 (UK healthcare real estate 1999-2020) [15] |
Healthcare properties offer comparable or superior yields to fixed income with additional inflation protection through indexed leases and capital appreciation potential. According to Cushman & Wakefield, all-property returns in Europe have exceeded inflation in 19 out of 22 years by an average margin of 7.6% [8]. This creates an opportunity for HNWIs to access institutional-quality returns through healthcare assets while maintaining a defensive position against market volatility.
The inflation protection mechanisms in healthcare real estate are particularly valuable in the current economic environment. These typically include:
The effectiveness of these inflation protection mechanisms has been demonstrated during recent inflationary periods. According to Cushman & Wakefield’s analysis, healthcare properties with RPI-linked rent reviews delivered average annual rental growth of 3.5-4.5% during 2021-2023, significantly outpacing many other commercial property sectors [8]. This rental growth not only protected income returns in real terms but also supported capital values during a period when rising interest rates put downward pressure on commercial property valuations more broadly.
A comprehensive analysis of UK healthcare real estate performance from 1999 to 2020 further underscores its attractiveness, with an average annual total return of 9.74%, outperforming stocks (3.88%), listed real estate (5.64%), and direct real estate (7.45%) [15]. Importantly, this performance came with lower annual risk (8.20%) compared to stocks (15.06%) and listed real estate (24.56%), resulting in a favorable Sharpe ratio of 0.92 [15].
The healthcare property sector encompasses various asset types, each with distinct characteristics that appeal to different investor objectives:
| Healthcare Sub-Sector | Typical Yield Range | Lease Length (WAULT) | Tenant Covenant Strength |
|---|---|---|---|
| Prime Care Homes | 3.75-4.50% [9] | 20-30 years | Strong (often backed by government funding) |
| Medical Centres/GP Surgeries | 4.00-5.50% | 15-25 years | Very Strong (NHS-backed) |
| Specialist Healthcare Facilities | 5.00-7.80% [3] | 10-20 years | Moderate to Strong (private operators) |
| Life Sciences Properties | 5.50-6.50% | 10-15 years | Variable (dependent on tenant) |
This granular view of healthcare sub-sectors allows HNWIs to align their investment choices with specific risk appetites and income requirements. For instance, investors prioritizing maximum stability might prefer GP surgeries with NHS-backed tenants, while those seeking higher yields might consider specialist healthcare facilities with strong private operators.
When evaluating healthcare property investments, experienced investors assess several key criteria, including location (proximity to hospitals, transport, and population centers), operator quality (reputation, track record, and financial stability), lease structure (length, break clauses, and rent escalation provisions), and regulatory compliance. Physical condition, market dynamics, and demographic trends also play crucial roles in investment decisions.
The UK government has introduced significant tax changes affecting HNWIs, including increased capital gains tax rates and the end of the ‘non-dom’ tax status [5]. These reforms have led to concerns about potential wealth migration and have created additional incentives for HNWIs to consider tax-efficient investment structures.
With proper structuring, healthcare property investments can provide both income stability and tax optimisation during a period when traditional tax advantages are being eroded for the ultra-wealthy. Several structures offer specific tax advantages for HNWIs investing in healthcare properties:
The UK government has introduced significant tax changes affecting HNWIs, including increased capital gains tax rates and the end of the ‘non-dom’ tax status [5]. These changes have intensified the need for tax-efficient investment structures that can preserve wealth while providing exposure to stable asset classes.
The key to balancing tax efficiency with investment performance lies in selecting structures that align with individual tax circumstances while maintaining exposure to the sector’s fundamental stability benefits. It’s crucial for investors to consult with tax advisors to understand the specific implications of investing in these structures, as factors like the fund’s domicile, investor residency, and the nature of the underlying asset can significantly impact tax liabilities [8].
A practical example comes from Enness Global’s case study of a UK ultra-high-net-worth individual who secured a £15 million illiquid asset facility by leveraging their diversified portfolio, including private equity funds, real estate holdings, and private equity positions [17]. This structured approach enabled the client to pursue additional investment opportunities in real estate development while optimizing their tax position through appropriate structuring.
"Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised." - Russell Sage
Despite the compelling case for healthcare property investments, accessing institutional-quality assets has traditionally been challenging for individual investors due to high capital requirements and limited market access. Co-investment structures have emerged as a solution to this challenge, enabling HNWIs to pool resources to access premium healthcare properties.
A survey revealed that 77% of HNWIs plan to increase their investment in UK property, with an average additional investment of £380,000 [6]. This strong intention creates an opportunity for specialised investment vehicles that can channel this capital into healthcare assets.
The trend of expanding access to private markets for individual investors is gaining momentum. Private asset managers like Blackstone, Apollo Global Management, and KKR are increasingly targeting individual investors, estimating a potential market between $80 trillion and $197 trillion [16]. This shift is exemplified by products like Blackstone’s Real Estate Income Trust (BREIT), which offers qualified individuals access to private market investments [16].
Co-investment structures offer several specific advantages for HNWIs:
SIRE Capital Partners has developed Single Asset Funds (SAFs) that enable HNWIs to co-invest in institutional-grade healthcare properties. These structures provide direct ownership benefits while maintaining the advantages of professional management, allowing investors to access the stability and yield advantages of healthcare assets without the operational complexities of direct property ownership.
A case study from Hardington Capital illustrates the potential of this approach. In 2019, the firm purchased a supermarket in Manchester for £3,950,000, achieving a running yield of 7.53% and a reversionary yield of 8.42% by June 2026 due to fixed rent increases [17]. The property, leased to Co-op until 2031, presented significant development opportunities, including potential redevelopment into a care home, targeting a potential IRR of over 15% [17].
The long-term investment horizon of HNWIs aligns perfectly with healthcare property characteristics. The Knight Frank Wealth Report 2025 indicates that 40% of wealthy individuals view property as a long-term investment, with a focus on prime locations [7]. This long-term perspective is well-suited to healthcare assets, which benefit from structural tailwinds that extend beyond typical economic cycles.
Demographic aging trends, increasing healthcare spending, and the essential nature of healthcare services create a foundation for sustained demand that makes these assets particularly suitable for wealth preservation across generations. As HNWIs increasingly focus on multi-generational wealth planning, healthcare properties offer a compelling combination of current income and long-term appreciation potential.
By 2025, HNWIs are projected to account for over 10% of all capital raised by private equity funds, with total assets under management in private equity reaching $1.2 trillion [10]. This trend is driven by several factors, including demographic shifts increasing demand for healthcare services and facilities, technological advancements creating new investment opportunities within the healthcare real estate sector, and portfolio diversification benefits as healthcare assets offer a counter-cyclical investment [10].
Looking ahead, several emerging trends will shape the healthcare property investment landscape:
For HNWIs seeking to shield their wealth from market volatility while generating stable income streams, UK healthcare assets represent a strategic allocation that addresses both immediate market concerns and long-term wealth preservation objectives. By providing access to institutional-quality healthcare properties through innovative co-investment structures, firms like SIRE Capital Partners are enabling HNWIs to benefit from this defensive asset class during a period of unprecedented economic uncertainty.
The current economic climate underscores the fundamental need for stability in high net worth portfolios. We have long maintained that UK healthcare real estate offers a uniquely compelling combination of secure income and resilience, precisely because it is underpinned by essential services, long-term leases often linked to inflation, and robust tenant covenants. While other asset classes may fluctuate with market sentiment or policy shifts, the demand for quality healthcare remains constant, driven by enduring demographic trends. This inherent stability is not merely theoretical; it is a demonstrable characteristic that provides a vital shield against volatility, aligning perfectly with the wealth preservation objectives we prioritise for our investors.
Accessing institutional-grade healthcare assets requires expertise and the right structure. We believe that Single Asset Funds provide the most direct and transparent pathway for high net worth individuals to co-invest in these properties, bypassing the complexities of direct ownership while benefiting from professional management. We acknowledge the sector presents nuances, from regulatory considerations to operational demands, but these are factors we actively manage through rigorous due diligence and strategic partnerships. Looking ahead, the structural drivers, including an aging population and ongoing investment in healthcare infrastructure, reinforce our conviction in the long-term value and income security this asset class offers, making it a cornerstone of a well-structured portfolio.
Patrick Ryan is a Principal and Co-founder at SIRE Capital Partners, working on Deal Origination and Asset Management. Patrick has spent 20 years in the property sector in London. His first foray into the sector was in 2003 when he co-founded a mezzanine finance business that focused on lending to property developers in and around London. Following this he headed up SIRE Properties, a healthcare focused asset management firm. Patrick has now co-founded SIRE Capital Partners that has expanded on his healthcare asset management focus to take in broader services to include brokerage and capital advisory.
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
The UK healthcare market is rapidly evolving, presenting unique investment opportunities in real estate.
A Single Asset Fund is an arrangement whereby like-minded investors collectively allocate funds to invest in a commercial property.
Invest in undervalued UK healthcare properties for stable, inflation-protected returns. Institutional interest signals resilience and growth potential, offering high net worth individuals a strategic wealth preservation opportunity.
UK care home fees surge, challenging wealth preservation. Healthcare Single Asset Funds offer inflation protection and strategic advantages over traditional property, ensuring resilient portfolios amidst rising costs.
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Invest in UK healthcare property for stable, inflation-protected returns. Long leases and demographic trends ensure resilience, making it a prime choice for High Net Worth portfolios in 2025.
- Khalid Hussain (Clinical Director at Todays Dental Group)
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HIGH NET WORTH INDIVIDUAL INVESTOR STATEMENT
If you meet condition A or B below, you may choose to be classified as a high net worth individual for the purposes of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.
SELF-CERTIFIED SOPHISTICATED INVESTOR STATEMENT
If you meet condition A, B, C or D below, you may choose to be classified as a self-certified sophisticated investor for the purposes of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001.
