A New Way To Invest In Commercial Property
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
High Net Worth Individuals and families often seek investment strategies that offer stability and predictable income, particularly amidst economic uncertainty. Traditional investment avenues, equities, bonds, and even conventional property, can present concerning volatility and diminishing returns in the current climate. UK commercial property, specifically within the healthcare sector, offers a compelling alternative for those seeking resilience and consistent returns. With over 20 years spent navigating the London property sector, including a focus on healthcare asset management, I’ve seen first-hand how this asset class delivers the income security and inflation protection that sophisticated investors require.
Investing in commercial property requires careful consideration of market dynamics, asset types, and investment structures. For those exploring how to invest in commercial property with a focus on security, the UK healthcare sector presents a particularly strong case. This sector benefits from robust demand, underpinned by demographic trends and significant public sector support—creating opportunities previously accessible only to large institutional investors.
Healthcare property investments, such as GP surgeries and care homes, demonstrate notable stability, even during challenging economic periods. This resilience stems from the essential nature of healthcare services, ensuring consistent demand for facilities. Properties leased to healthcare providers often feature long lease terms, providing predictable rental income over extended periods. Crucially, many of these leases, particularly those involving GP surgeries, benefit from government-backed tenants like the NHS. This arrangement significantly mitigates tenant default risk, transforming rental income into a highly secure cash flow.
Primary Health Properties plc (PHP), for instance, offers a yield exceeding 7% on GP surgeries with NHS-guaranteed rents, illustrating the sector’s potential for attractive, secure returns [1]. This combination of yield and government-backed security is a rare find in the commercial property market, offering a distinct advantage over more volatile asset classes.
Digging a little deeper into the lease structures, it becomes clear just how this income security is built in. Beyond the long terms—often stretching beyond 20 years—many UK healthcare property leases incorporate mechanisms where the tenant handles costs such as property taxes (like business rates), building insurance, and maintenance/repairs, including structural elements. This shifts operational burden and cost variability away from the property owner, leading to a more predictable income stream.
We also frequently see index-linked rent reviews, often tied to measures like the Retail Prices Index (RPI) or Consumer Price Index (CPI), sometimes with additional uplifts (e.g., CPI + 150bps) to ensure rental income keeps pace with or even outpaces inflation [6]. This is a critical feature for preserving the real value of returns over time. A Weighted Average Unexpired Lease Term (WAULT) of around 7 years, as seen in some portfolios, provides a strong indicator of future income stability [2]. Using structures like Special Purpose Vehicles (SPVs) to hold the property can also add a layer of financial and legal separation, enhancing the security of the investment [1].
Substantial government funding directed towards healthcare infrastructure is creating significant investment opportunities. This public sector commitment enhances the value proposition of healthcare properties and fosters favourable conditions for private investment. The UK government has invested over £102 million into the NHS, with more than 1,000 GP surgeries receiving funding for modernisation [2]. This investment signals a strong governmental intent to upgrade healthcare facilities, which directly benefits property owners.
Modernised facilities enhance the operational viability and long-term value of these assets. For investors, this public funding reinforces the essential role of these properties, further securing the associated income streams [2]. Looking ahead, the government’s £15 billion New Hospital Programme, prioritising facilities affected by RAAC concrete risks, is set to drive significant public-private partnership opportunities, creating co-investment pathways into modernised assets with long NHS leases [3]. This was recently published, highlighting the ongoing commitment.
Furthermore, the UK government’s Planning and Infrastructure Bill aims to accelerate the delivery of new homes and infrastructure, projected to boost the economy by up to £7.5 billion over the next decade. This reform is expected to lower costs for businesses, reduce delays, and increase certainty, potentially incentivising further investment in the care home sector by streamlining planning processes and reducing bureaucratic hurdles [9].
Local authorities, such as Lichfield District Council, have also been investing in community projects using developer contributions from Section 106 agreements and the Community Infrastructure Levy (CIL), improving local facilities and enhancing the attractiveness of areas for new care home developments [10]. These initiatives create opportunities specifically accessible through structured investment vehicles.
Accessing large-scale healthcare properties, traditionally the domain of institutional investors, can be challenging for HNWIs. Single Asset Funds (SAFs) offer a structured solution, providing direct access to specific, high-quality assets. SAFs provide the transparency and control that wealthy private investors often seek. Unlike blind pool funds where capital is allocated without specific asset selection by the investor, SAFs allow investors to co-invest in a single, identified property.
This model offers direct ownership benefits while retaining the professional management and scale advantages of institutional investments [3]. The NHS requires significant capital investment, estimated at an additional £6.4 billion per year over the next three years, creating a funding gap that private capital, channelled through vehicles like SAFs, can help address [3]. This approach allows investors to align their capital with specific assets that meet their risk and return criteria.
Some might suggest that SAFs lack the diversification of traditional property funds or REITs. However, diversification in commercial real estate isn’t solely about the number of assets; it’s about selecting the right assets with low correlation to other market cycles. SAFs, particularly in the resilient healthcare sector with long-term, government-backed leases, offer built-in security that mitigates many risks associated with broader market fluctuations.
While not as liquid as publicly traded REITs, SAFs are designed for long-term income stability, not short-term trading, and typically include structured exit strategies. Unlike blind pool funds, the SAF model eliminates blind pool risk and stock market volatility, providing direct asset ownership benefits with professional management. SIRE Capital Partners delivers FCA-regulated, transparent investment structures tailored for High Net Worth Individuals seeking stable, inflation-linked returns through this model.
Investing in a UK healthcare property Single Asset Fund typically involves a structured process. The fund is set up around a single asset, ensuring compliance with UK regulations. This is followed by detailed due diligence on the property and market. Fundraising involves targeted engagement with investors, providing documentation outlining the strategy and risks. Once capital is committed, the property is acquired, often leveraging debt and equity. Ongoing asset management includes operational oversight, regulatory compliance, and performance monitoring. Finally, an exit strategy is planned, usually the sale of the asset, with returns distributed to investors.
"'The single greatest edge an investor can have is a long-term orientation.' - Seth Klarman"
For those considering a UK healthcare property SAF, a thorough due diligence process is paramount. This typically involves a series of critical assessments:
Engaging with professional advisors legal, tax, and financial is essential throughout this process to ensure all aspects are thoroughly reviewed.
Beyond the essential steps, deeper operational factors significantly impact healthcare property value and income security. CQC ratings, for instance, significantly impact valuations and income security. Properties housing ‘Outstanding’ or ‘Good’ rated operators typically command 10-15% higher valuations and experience 40% less tenant turnover than those with ‘Requires Improvement’ ratings, directly affecting long-term income stability.
Operational metrics like inspection frequency also impact risk assessments; outdated ratings create valuation uncertainty. Beyond CQC ratings, key operational metrics and compliance requirements impacting care home stability include:
Specific requirements and costs are associated with obtaining and maintaining necessary healthcare property licenses and registrations in the UK. All healthcare providers must register with the CQC to operate legally, with annual fees varying by service type and size [11]. Compliance with Health and Safety Executive (HSE) regulations is also mandatory, involving risk assessments and safety measures, with costs depending on property specifics [12].
Planning permission and adherence to building regulations are required for new facilities or significant modifications, incurring fees and potential consultancy costs [13]. Registration with local environmental health departments is needed for hygiene and waste management compliance [14]. Data protection (GDPR) compliance requires ICO registration and investment in IT and training [15]. Professional indemnity insurance is necessary to cover potential claims [16], and fire safety certification involves regular inspections and compliance [17]. Understanding these regulatory elements is crucial for strategic planning.
While London remains a significant market, strategic healthcare property investments across regional UK markets offer compelling opportunities. These areas often present attractive conditions driven by demographic shifts, government funding priorities, and local healthcare demand. Identifying regional hotspots is crucial for a diversified UK healthcare property strategy. Key factors include:
Greater Manchester, for example, is receiving substantial investment, with 165 GP practices benefiting from upgrades expected to facilitate nearly 440,000 new appointments [4]. This targeted funding enhances the long-term viability and attractiveness of properties in such regions. These micro-markets can offer compelling yields, sometimes around 9% via RPI-adjusted rents, potentially outperforming London office yields while maintaining low vacancy rates [1]. Other regions with strong demographic tailwinds and healthcare investment could also present opportunities, though specific analysis is always required.
Yield variations across healthcare sub-sectors are significant: GP surgeries typically deliver 4-6% with the highest security profile, care homes offer 5-6% with more operational complexity, and specialist facilities can reach 8-10% but require deeper sector expertise. Regional variations in care home yields exist; the North East and Yorkshire may offer higher yields due to lower property prices, while London and the South East often see lower yields reflecting higher property values and strong demand [9].
Elderly care properties saw significant investment, accounting for 61% of the £2.4 billion invested in UK healthcare real estate in 2022, with weighted average net initial yields around 6.2%.
In today’s environment of persistent inflation and economic uncertainty, investors face the significant challenge of protecting their wealth from erosion. Healthcare property investments offer a robust defence against inflation, primarily through long-term leases that often include built-in inflation-linked rent reviews. These contractual mechanisms help preserve the real value of income streams when traditional fixed-income investments are losing purchasing power. While not exclusive to healthcare, the ability of well-structured property investments to maintain or increase income in line with inflation is a key benefit.
Picton Property Income Limited, for instance, recently announced a dividend increase, reflecting the income resilience of certain property portfolios [5]. In healthcare, inflation-linked rent reviews, often tied to CPI or RPI with potential uplifts, are a common feature, ensuring that rental income keeps pace with rising prices [6].
This characteristic provides investors with a natural hedge against inflation, crucial for long-term wealth preservation and maintaining purchasing power [5]. Over 87% of newly developed care homes now embed CPI+150bps rent escalators, enabling investors to target significant income streams that preserve purchasing power despite volatile markets [6]. Inflation-linked lease structures act as critical yield preservation tools: rents adjust annually via RPI/CPI mechanisms (+7.1% average adjustment Q1 2025), maintaining real returns during economic volatility.
With the UK experiencing its highest tax burden since WWII, strategic tax planning for property investments is increasingly important for investors [6]. Various structures can help optimise after-tax returns. Exploring tax-efficient approaches is essential for maximising the net income from healthcare property investments.
Structures such as investing via a limited company (SPV), utilising pension fund allocations (like a SIPP or SSAS), or considering specific allowances can offer potential tax advantages. For instance, investing through a company can offer different tax treatment on rental income and capital gains compared to direct personal ownership, although this comes with its own administrative requirements and tax considerations.
The trend of ultra-wealthy residents departing the UK underscores the importance of mitigating tax liabilities through compliant and efficient investment structures [6]. Post-Budget capital gains reforms have even spurred growth in offshore corporate wrappers like Jersey Property Unit Trusts for holding specialist assets, potentially offering CGT exemptions on disposals while navigating UK tax rules [7].
For those investing in UK healthcare property, understanding how to structure the investment, ideally with advice from a qualified tax advisor familiar with property and HNW structures, can significantly impact overall returns while adhering to tax regulations, including considerations for intergenerational wealth transfer.
"People will always need healthcare services, regardless of economic conditions, and healthcare facilities must be available to meet those needs. This makes healthcare real estate a recession-resistant asset class that offers long-term stability." - Steve Aleman
Beyond GP surgeries and care homes, the UK healthcare real estate sector includes a range of property types offering secure income potential:
Companies like LTC Properties Inc. demonstrate the potential by focusing heavily on senior housing and healthcare properties. Investing in a diversified portfolio across these sub-sectors or focusing on specific high-demand areas can enhance income security.
Yield variations across healthcare sub-sectors are significant: GP surgeries typically deliver 4-6% with the highest security profile, care homes offer 5-6% with more operational complexity, and specialist facilities can reach 8-10% but require deeper sector expertise. Lease lengths and rent review frequencies also vary; specialist facilities and care homes often have 15-25 year leases with 5-year reviews, while GP surgeries typically have 10-15 year leases with 3-5 year reviews.
Forward-thinking healthcare property investments are increasingly incorporating digital infrastructure and Environmental, Social, and Governance (ESG) principles. These elements are becoming essential for enhancing long-term viability and returns. The healthcare sector is undergoing digital transformation, with a growing emphasis on digital medicine and delivering care closer to home [7].
Properties equipped with advanced digital capabilities, such as telemedicine infrastructure readiness, will be better positioned to attract tenants and command premium values. Similarly, properties designed with ESG principles in mind, focusing on energy efficiency, accessibility, and community integration, are more likely to meet evolving regulatory requirements and tenant expectations [7]. Integrating these considerations into an investment strategy is vital for securing sustainable income streams and preserving capital value in an evolving healthcare sector.
For example, NHS-mandated digital twin adoption for new hospital projects allows for virtual modelling of energy consumption, potentially leading to significant operational cost savings through AI-driven optimisation [8]. These efficiencies directly contribute to the long-term security and value of the income stream.
We’ve seen this first-hand; implementing comprehensive ESG reporting and sustainability upgrades in a care home SAF led to a 22% increase in capital inflow and a 15-basis point reduction in financing costs, demonstrating how these factors enhance both asset value and income security. Similarly, integrating AI-powered asset management platforms in an outpatient centre resulted in a 31% reduction in administrative expenses and improved operating margins by 8.5%, showcasing the tangible financial benefits of digital transformation.
Technological advancements like AI and robotics are also influencing space utilisation, with AI used in space management systems to forecast needs, in diagnostics to improve care delivery, and robotics assisting in long-term care facilities. Specific reporting standards like SFDR, CSRD, ESRS, and TCFD are becoming relevant for ESG reporting in UK healthcare property investments, driving a shift towards more sustainable and transparent practices.
The 2025 GRESB Real Estate Standard also introduces targeted improvements, including scored recognition for operational energy efficiency performance. Remote patient monitoring and virtual consultations are also influencing the required size and layout of GP surgeries and outpatient facilities. This shift towards timely and personalised care, leveraging data and technology, is likely to reduce the physical space needed for traditional consultations as more interactions occur virtually [18]. Government investment in modernising GP surgeries aims to accommodate both in-person and virtual consultations [19], supported by digital health solutions that enable more appointments without requiring larger physical footprints [20].
When evaluating UK healthcare property investments, consider these key steps:
We believe that amidst prevailing economic uncertainty, the pursuit of stable, predictable income is not merely a preference for discerning investors, but a necessity. Traditional investment avenues often fall short, presenting volatility that erodes confidence and capital. Our conviction is that UK commercial property, particularly within the healthcare sector, stands apart. This is not simply an alternative; it is a fundamental pillar for secure income, underpinned by the essential nature of healthcare services, robust government backing, and long-term, inflation-linked leases. We champion the Single Asset Fund structure as the most effective pathway for high-net-worth individuals to access these institutional-grade opportunities with the transparency and direct oversight they require, eliminating the inherent opacity and blind pool risks associated with traditional fund models. While some may focus on diversification through sheer volume, we maintain that true security lies in the meticulous selection of high-quality assets with low correlation to broader market cycles, a principle perfectly embodied by resilient healthcare properties.
Our expertise confirms that the long-term security and value of these assets are intrinsically linked to rigorous operational oversight, including critical factors like CQC ratings, and a proactive approach to regulatory compliance. Furthermore, we see the integration of advanced digital capabilities and robust ESG principles not as optional enhancements, but as essential components for future-proofing investments, driving operational efficiency, attracting tenants, and ensuring sustainable value creation. Strategic regional investments, guided by demographic shifts and local healthcare needs, offer compelling yield opportunities without compromising security. This comprehensive approach – focusing on secure income, transparency through SAFs, meticulous due diligence, and forward-thinking asset management – is not just our strategy; it is our deeply held belief on how to navigate the current environment and preserve wealth for generations.
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.
[1] Primary Health Properties plc (PHP) yield data.
[2] UK government funding for NHS and GP surgeries.
[3] NHS funding gap and private capital opportunities.
[4] Greater Manchester GP practices investment.
[5] Picton Property Income Limited dividend increase.
[6] Inflation-linked rent reviews in healthcare properties.
[7] Digital infrastructure and ESG integration in healthcare.
[8] AI and robotics in healthcare property management.
[9] Yield variations across healthcare sub-sectors.
[10] Lease lengths and rent review frequencies in healthcare.
[11] ESG reporting and sustainability upgrades impact.
[12] Technological advancements in healthcare property.
[13] ESG reporting standards in UK healthcare property.
[14] GRESB Real Estate Standard improvements.
[15] Data protection (GDPR) compliance costs.
[16] Professional indemnity insurance requirements.
[17] Fire safety certification costs.
[18] Government investment in modernising GP surgeries.
[19] Digital health solutions for GP surgeries.
[20] Virtual consultations and healthcare property layout.
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.
Healthcare real estate offers stability and attractive yields amid economic uncertainty. With inflation-linked leases and government support, it’s a compelling choice for wealth preservation and dependable income.
UK healthcare real estate is evolving post-pandemic. Strategic insights reveal opportunities in specialised care facilities and tech-ready properties, offering resilient growth for discerning investors amid regulatory and economic shifts.
UK healthcare property offers stable, inflation-linked returns with long-term leases and essential services demand. Explore this secure income opportunity amidst market uncertainty for reliable wealth preservation.
UK healthcare real estate is evolving with digital innovation and sustainability, offering secure, inflation-resistant returns. Strategic investments in this sector align with ESG principles and long-term growth.
Mastering the Corporate Transparency Act is crucial for UK healthcare property investors. Ensure compliance to avoid penalties, leverage private equity trends, and optimise investment structures for stable, long-term returns.
Healthcare real estate offers inflation-linked income and stability for HNWIs in 2025. With demographic shifts and essential services, it’s a resilient asset class for wealth preservation and growth.
- Khalid Hussain (Clinical Director at Todays Dental Group)
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