A New Way To Invest In Commercial Property
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
For high-net-worth investors seeking stability in commercial property investments, the UK healthcare sector is delivering exceptional performance amid broader market volatility. With Medical Office Buildings (MOBs) reaching unprecedented occupancy levels and institutional investors engaging in fierce bidding wars for prime healthcare assets, the sector presents compelling opportunities for those seeking secure income streams with inflation protection.
The healthcare property sector has reached a significant milestone, with MOB occupancy rates climbing to 92.8% in Q4 2024, up from 92.4% the previous year [1]. This 0.4% increase within a single year demonstrates the remarkable resilience of healthcare properties even as other commercial sectors face headwinds.
For sophisticated investors, these record-high occupancy rates translate directly to income security—a critical consideration in today’s uncertain economic climate. The combination of strong tenant demand and limited new supply has created a landlord-favourable market with minimal vacancy risk and sustained rental growth potential.
Geographic variations in MOB performance are noteworthy, with certain regions demonstrating particularly strong fundamentals. Four Sunbelt markets have seen rent growth exceeding 3% from 2023 to 2024, while Boston and Northern New Jersey also experienced significant rent increases due to their proximity to growing health systems [1]. These regional variations highlight the importance of location selection when investing in healthcare properties.
“Private investors have been the most active buyers of commercial real estate globally for the past three years, surpassing institutional and public investors to reach a 49% share of total investment in 2023, the highest on record.” — Knight Frank’s Wealth Report [8]
This surge in private investment underscores the growing recognition among high-net-worth individuals of commercial property’s value proposition, particularly in defensive sectors like healthcare that offer stability during economic uncertainty. In the UK specifically, HNWIs are diversifying their portfolios by investing in various commercial sectors, with private clients typically investing anywhere from £5 million to £25 million on average [8].
The exceptional performance of healthcare properties isn’t merely cyclical but underpinned by fundamental structural changes in healthcare delivery. The ongoing shift from inpatient to outpatient care models is projected to drive 10.6% growth in outpatient volumes over the next five years, compared to just 0.9% for inpatient services [1].
This dramatic disparity represents a seismic shift in how healthcare is delivered, creating sustained demand for medical office space as providers expand their outpatient footprints. For property investors, this trend translates to long-term tenant stability and predictable income streams—precisely the characteristics that high-net-worth individuals seek in commercial property investments.
The impact of this outpatient care shift on investment returns is substantial. MOBs benefit from exceptionally high tenant retention rates, with healthcare providers typically renewing their leases at rates significantly higher than in traditional office spaces [1]. This stability directly enhances investment returns by reducing costly vacancy periods and tenant improvement expenses, while maintaining consistent cash flows even during economic downturns.
According to CBRE’s recent analysis, “Long-term healthcare trends and strong 2024 performance bolster the outlook for medical outpatient buildings. The shift towards outpatient care is creating sustained demand for well-located, high-quality MOBs across the UK, offering stable occupancy rates and rental income for investors.” [13]
The UK healthcare property market encompasses several distinct sub-sectors, each with unique risk-return characteristics that sophisticated investors should understand:
Each sub-sector responds differently to market conditions and policy changes. For instance, the UK government’s recent healthcare spending initiatives are likely to benefit primary care facilities and outpatient centres disproportionately, as the Chancellor’s health push focuses on accelerating diagnostics and treatments within the NHS [20]. This targeted spending includes capital improvements aimed at faster diagnosis and reduced treatment delays, with infrastructure enhancements such as more medical scanners and the development of urgent care hubs.
Healthcare properties have demonstrated superior performance compared to many mainstream commercial property sectors. According to Savills, healthcare assets have achieved higher average annual rental income returns of 5.9% and five-year capital growth rates of 12%, positioning them just behind the urban logistics sector and ahead of regional logistics, retail warehouses, UK residential, and central London offices [5].
While the broader commercial property market has faced challenges—with the retail sector experiencing structural changes leading to dwindling returns and the industrial sector cooling off—alternative sectors like healthcare have maintained strong performance, with total returns of 7.4% in 2019, ranking it among the best-performing commercial property sectors [6].
This performance advantage is further evidenced by real-world examples. Impact Healthcare REIT, which focuses on care homes leased to reputable operators, has achieved a total return of approximately 8.8% per year since listing, with consistent dividend growth and increasing property valuations [9]. As of September 2024, the company maintains a low loan-to-value ratio of approximately 28% and offers a fully covered dividend yield of about 7.9% [9].
In the current inflationary environment, healthcare REITs have demonstrated resilient performance compared to other property sectors. This resilience stems from several structural advantages:
National Health Investors (NHS), a healthcare-focused REIT, has maintained dividend payments for 35 consecutive years despite economic fluctuations, offering a dividend yield of 5% [19]. This long-term dividend consistency demonstrates the sector’s ability to provide reliable income even during periods of economic volatility and inflation.
Investment in UK healthcare properties is projected to rebound significantly, with volumes expected to reach £1.2 billion in 2024, following a 49% year-on-year decline in 2023 [21]. This anticipated growth is driven by the sector’s strong fundamentals and increasing demand, signaling renewed market confidence and potential for capital appreciation.
"The real estate market is moving towards sectors driven by demographic trends, like healthcare, offering resilient and predictable returns." - Dr. Alexandra Townley
The attractiveness of UK healthcare property has been further validated by intense institutional competition for prime assets. The acquisition of Assura, a major UK-based NHS property landlord, by a U.S. private equity consortium for £1.7 billion underscores the growing institutional interest in UK healthcare properties [22]. This transaction highlights the sector’s attractiveness to large-scale investors seeking stable, long-term income streams.
This fierce competition for healthcare assets demonstrates the premium valuations institutional investors are willing to pay for properties offering stable, long-term income streams. For private investors, this institutional validation strengthens the investment case for healthcare property while simultaneously raising the barriers to entry for accessing prime assets.
The intensity of institutional interest is highlighted in recent Reuters reporting: “Private equity firms KKR and Stonepeak Partners increased their takeover bid for Assura to nearly £1.7 billion, surpassing a rival bid from Primary Health Properties. This heightened competition underscores the sector’s attractiveness due to its stable, long-term income streams backed by healthcare tenants.” [14]
The Assura bidding war is not an isolated incident but part of a broader trend. Following a £1 billion merger with MedicX Fund in 2019, Primary Health Properties (PHP) became the largest healthcare property investor in the UK, with a combined portfolio of almost 500 properties [10]. This consolidation reflects the strategic importance major investors are placing on building scale in the healthcare property sector.
The exceptional income security of healthcare properties stems largely from their high-quality tenant profile. Health systems accounted for nearly half of the 2.9 million square feet of MOB leases signed last year, while specialty providers represented another 31% [1]. These institutional tenants typically offer stronger covenant strength than tenants in other commercial sectors.
For investors, the concentration of leasing activity among health systems and specialty providers creates exceptional income security. These tenants generally have stronger financial positions than typical commercial occupiers, with health systems often carrying investment-grade credit ratings and specialty providers generating stable cash flows from essential medical services.
Furthermore, healthcare tenants typically sign longer leases with inflation-linked rent reviews, providing investors with the rare combination of blue-chip covenant strength and built-in income growth—a compelling proposition in today’s uncertain economic climate. The tenant stability in MOBs is particularly noteworthy, with healthcare providers demonstrating a high likelihood of renewal due to the specialized nature of medical facilities and the substantial costs associated with relocation [1].
The UK healthcare property market faces severe supply constraints that further strengthen its investment case. In 2024, only 86 additional care home beds were created across the UK, highlighting the significant shortfall in meeting growing demand from an aging population [3].
With Knight Frank estimating a potential shortfall of 200,000 care beds by 2050 [3], this supply-demand imbalance creates significant upward pressure on occupancy rates and rental values. For investors with development expertise, these constraints present opportunities to develop new facilities or reposition existing properties to meet healthcare needs, potentially generating premium returns compared to fully-stabilised assets.
The Financial Times recently reported on this critical supply shortage: “In 2024, only 86 additional care home beds were created across the UK, highlighting a significant shortfall in meeting the growing demand from an aging population. Knight Frank estimates a potential shortfall of 200,000 care beds by 2050. This supply-demand imbalance presents compelling development and repositioning opportunities for investors with the expertise to navigate the complex healthcare property landscape.” [15]
This supply-demand dynamic is further exacerbated by the UK’s rapidly aging population. The ongoing demographic shift will drive sustained demand for healthcare facilities across the spectrum, from primary care to specialist treatment centres and care homes.
In the current inflationary environment, healthcare properties have demonstrated resilient rent growth even amid economic headwinds. Four Sunbelt markets saw rent growth exceeding 3% from 2023 to 2024, while Boston and Northern New Jersey also experienced rent increases due to their proximity to growing health systems [1].
This consistent rent growth demonstrates the sector’s inflation-hedging capabilities. Unlike many commercial property types that struggled with rent growth during recent economic volatility, healthcare properties have maintained positive rent trajectories due to their essential nature and the specialised requirements of medical tenants.
For high-net-worth investors seeking to preserve purchasing power in their income-generating investments, healthcare properties offer a natural hedge against inflation—a critical consideration in portfolio construction. UK healthcare REITs, such as Primary Health Properties and Assura, have demonstrated resilience as effective inflation hedges through their portfolios of properties with long-term, government-backed leases that often include rent reviews linked to inflation indices.
Target Healthcare REIT exemplifies this inflation protection strategy through its portfolio of purpose-built care homes leased to high-quality operators on long-term agreements with built-in rental increases. As of June 2024, the company has built a portfolio valued at £0.8 billion, comprising 95 care homes that provide investors with a stable, inflation-protected income stream [10].
The integration of new technologies is increasingly influencing healthcare property investments and creating opportunities for forward-thinking investors. Blockchain technology is gaining traction in real estate investment, with a 2024 study proposing a framework using blockchain to address issues like lack of transparency, fraud, and liquidity in real estate investments [8]. This includes smart contracts, immutable record management, tokenization, record tracking, and time-stamped storage—all of which can enhance the efficiency and security of healthcare property transactions.
Tokenization of real estate assets, in particular, is lowering the entry barrier for investors by improving liquidity and interoperability among stakeholders [8]. For high-net-worth individuals interested in healthcare property, these technological advancements offer new ways to access and manage investments with greater transparency and efficiency.
Beyond blockchain, healthcare properties themselves are evolving to accommodate technological advancements in medical care. Modern medical office buildings and healthcare facilities increasingly require robust digital infrastructure, flexible spaces that can adapt to changing technologies, and design elements that support both in-person and virtual care delivery—creating both challenges and opportunities for property investors.
The UK government’s recent spending review highlights this technological transformation, with plans to invest £10 billion in NHS technology and digital transformation by 2028-29, an increase of nearly 50% on current levels. This investment aims to deliver productivity growth of 2% each year, unlocking £17 billion in savings over three years [16]. For healthcare property investors, this technological push will likely accelerate demand for modern, digitally-enabled medical facilities capable of supporting next-generation healthcare delivery.
Environmental, Social, and Governance (ESG) factors are becoming increasingly important in healthcare real estate investment decisions. According to CoStar, “Sustainability and ESG considerations are now at the forefront of all development and investment strategies, with the shift towards net-zero carbon goals accelerating. By 2025, this will be a fundamental expectation rather than a consideration, driving new developments and retrofits in the coming year.” [17]
For high-net-worth investors, integrating ESG principles into healthcare property investments not only aligns with growing social responsibility expectations but can also enhance long-term returns. Properties with strong ESG credentials often command premium rents, attract higher-quality tenants, and may benefit from lower operating costs and reduced regulatory risks.
The healthcare sector presents unique opportunities for impactful ESG implementation. From energy-efficient building systems that reduce carbon footprints to designs that enhance patient outcomes and staff wellbeing, healthcare properties can deliver both social impact and financial returns. Forward-thinking investors are increasingly considering these factors when evaluating healthcare property opportunities, recognizing that ESG performance may become a key differentiator in property valuations over the coming years.
"Healthcare investment activity is expected to remain robust in 2023 with investors attracted to strong occupier demand, long lease terms, index-linked reviews and the ability to deliver on ESG strategies." - CBRE
The increasing institutionalisation of UK healthcare property, with overseas buyers accounting for 72% of acquisitions [4], creates challenges for private investors seeking exposure to this resilient asset class. This dominance of institutional capital reflects the sector’s appeal to sophisticated investors seeking defensive assets with stable income profiles, but it has also raised barriers to entry for private investors, with prime healthcare assets often trading at scale and price points beyond individual investor reach.
For high-net-worth individuals looking to access this market, several practical strategies exist:
When evaluating these options, investors should consider factors such as fund structure, fees, and the track record of the management team before committing capital. The right approach will depend on individual investment objectives, time horizon, and liquidity requirements.
Primary Health Properties provides an instructive case study for high-net-worth investors considering healthcare property investments. PHP focuses on acquiring purpose-built health centres, with at least 90% of income derived from the NHS on long-term leases, ensuring a stable and predictable income stream [10].
Following a £1 billion merger with MedicX Fund in 2019, PHP became the largest healthcare property investor in the UK, with a combined portfolio of almost 500 properties [10]. As of June 2026, PHP owns and operates more than 500 primary healthcare facilities within the UK and Ireland, with a portfolio worth £2.8 billion as of December 2023 [10].
What makes PHP particularly attractive to income-focused investors is its tenant profile and occupancy rates. Following the acquisition of MedicX, PHP’s properties maintain a remarkable 99.5% occupancy rate [10], demonstrating the exceptional stability that well-positioned healthcare assets can provide.
Recent market performance further validates PHP’s investment approach. According to Kalkine Media, “Primary Health Properties has traded above its 200-day moving average and intraday high of GBX 103.60 before settling at GBX 101.85, indicating a significant level of interest in the stock. The company’s role as a long-term landlord to government-backed tenants enhances stability of its rental income base.” [18]
The UK healthcare property sector offers a compelling proposition for high-net-worth investors seeking stable income amid market uncertainty. With record-high occupancy rates, structural demand drivers, institutional validation, quality tenants, supply constraints, and inflation protection, healthcare assets provide a rare combination of income security and growth potential.
While accessing prime healthcare assets has traditionally been challenging for private investors, innovative structures like Single Asset Funds are democratising access to this attractive sector. For sophisticated investors willing to look beyond traditional commercial property sectors, UK healthcare property offers an opportunity to secure stable, inflation-protected income streams backed by essential services and demographic tailwinds.
To maximize success when investing in healthcare property, consider these practical recommendations:
As the healthcare sector continues to evolve with changing demographics, technological advancements, and shifting care models, well-positioned healthcare properties are likely to remain among the most resilient and income-secure commercial real estate investments available to high-net-worth individuals in the UK market.
We view the UK healthcare property sector as inherently aligned with our focus on secure income real estate. The fundamental drivers – an aging population and the increasing shift towards outpatient care – create enduring demand for well-located medical facilities and care homes. This structural demand, coupled with the essential nature of healthcare services, underpins the sector’s exceptional occupancy rates and tenant stability. We see this as a natural conclusion drawn from the sector’s characteristics, providing the reliable, inflation-protected income streams that high-net-worth investors seek, particularly when anchored by strong covenants like the NHS or established health systems with long, inflation-linked leases.
While institutional interest validates the sector’s appeal, it also presents access challenges for private investors. This is precisely where our approach provides clarity and control. We believe that accessing specific, high-quality assets through transparent structures, rather than blind pools, is paramount. Our Single Asset Funds allow investors to directly own a share of institutional-grade properties, offering visibility over tenant quality, lease terms, and location – factors we consider critical for long-term performance and income security. We are confident that diligent selection, focusing on these core fundamentals and incorporating modern requirements like technological readiness and ESG standards, positions us to deliver the stable returns our investors expect from this resilient asset class.
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.
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- Khalid Hussain (Clinical Director at Todays Dental Group)
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