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 UK’s prime residential property market continues to falter, high-net-worth individuals are increasingly turning to healthcare real estate as a strategic refuge. Recent data reveals a remarkable divergence between these two property sectors, with healthcare transactions reaching record levels while luxury residential sales decline significantly. This shift represents more than a temporary trend—it signals a fundamental reassessment of property investment strategies among Britain’s wealthy investors seeking stable, inflation-protected returns.
Healthcare real estate transactions in the UK reached £3.2 billion in 2024, marking the highest figure since 2020 according to Knight Frank’s latest report [1]. This impressive performance comes despite broader economic uncertainty, demonstrating the sector’s resilience and growing appeal to sophisticated investors. The composition of these transactions reveals important insights about investor preferences, with elderly care facilities dominating at 68% of total transactions, private hospitals accounting for 29%, and the remaining 3% comprising adult specialist care, primary care, and childcare assets [1].
“Despite macro-economic uncertainty, this year saw investors confirm their positive sentiment in the healthcare sector,” according to Knight Frank’s analysis [1]. This confidence is reflected in the diverse investor base driving record activity, with demand from overseas capital reaching 52.5% of total investment last year [1]. Portfolio deals accounted for 85% of transactions in 2024, compared to just 52% in 2023, indicating a strong preference for scale among institutional investors [1].
This record-breaking activity stands in stark contrast to the residential property market’s current struggles. According to Financial Times data, while healthcare real estate transactions reached £3.2 billion, the prime residential sector saw a 7% decline in sales and buyer registrations down by 13% [4]. Properties are lingering 50% longer on the market, with average price cuts of 5% [4]. The surge in healthcare property investment reflects growing recognition of the sector’s unique characteristics: long-term leases, stable occupancy rates, and income streams often backed by essential service providers.
A significant driver behind the healthcare property boom has been the substantial increase in overseas capital flowing into the sector. US-based REITs and private equity groups now account for a remarkable 66% of global flows into UK healthcare, compared to just 34% from the European Union [2]. This represents a dramatic shift in international investment patterns and carries important implications for property valuations.
The influx of US capital signals robust confidence in the long-term prospects of UK healthcare assets. American investors are attracted to UK healthcare properties due to several key factors: the sector’s demographic resilience, the stability of the UK healthcare system, and the potential for both income security and capital appreciation in a market with structural supply constraints [2].
“Both small and large portfolios are transacting, a sign of both market entry and consolidation.” – Knight Frank Healthcare Capital Markets Report [3]
The competitive dynamics created by this international capital flow are reshaping the market environment. Domestic investors now face increased competition for prime assets, particularly in portfolio transactions where international buyers can leverage their scale and lower cost of capital. This competition is most intense for high-quality assets with strong tenant covenants and long lease terms, precisely the type of properties that offer the stability and income security sought by HNWIs.
For high-net-worth individuals, this trend creates both challenges and opportunities. While increased competition may drive up acquisition costs, it also validates the investment thesis for healthcare properties and suggests continued capital appreciation potential. The key is accessing these opportunities through appropriate investment vehicles that can compete at institutional scale.
One of the most notable shifts in the healthcare property market has been the dramatic increase in portfolio transactions. In 2024, portfolio deals accounted for 85% of transactions, compared to just 52% in 2023 [3]. This trend reflects institutional investors’ pursuit of scale and diversification within the healthcare sector, but creates access challenges for individual investors.
The dominance of portfolio transactions presents both obstacles and opportunities for HNWIs. While individual investors typically lack the capital to compete for large portfolios independently, this market structure has created demand for investment vehicles that can aggregate capital while maintaining transparency. Single Asset Funds (SAFs) offer a solution by enabling collective investment in specific healthcare properties, providing access to institutional-grade assets without sacrificing control or visibility.
SIRE Capital Partners specialises in this approach, offering SAFs that allow HNWIs to co-invest in high-quality healthcare properties. Unlike traditional property funds that pool investor capital without asset-level discretion, SAFs enable investors to select individual properties while benefiting from professional fund management and regulatory oversight.
This approach addresses several key challenges facing HNWIs in the current market environment. Many investors struggle to access institutional-grade healthcare property investments that require substantial capital, particularly as 85% of transactions now involve portfolio deals requiring significant investment scale. Additionally, traditional REIT investments offer limited transparency and control, with increasing exposure to M&A activity and market volatility.
| Performance Metric | Prime Residential Properties | Healthcare Properties |
|---|---|---|
| Transaction Volume | 7% drop in prime property sales [4] | £3.2 billion in 2024, highest since 2020 [1] |
| Buyer Interest | 13% decrease in new buyer registrations [4] | 52.5% overseas capital demand, 66% from US investors [2] |
| Time on Market | Properties lingering 50% longer [4] | Strong transaction velocity across portfolio sizes [3] |
| Price Trends | Average price cuts of 5% [4] | Stable valuations supported by essential service demand |
Several factors are driving residential market weakness, including changes to non-domiciled tax status, higher interest rates, and economic uncertainty. While domestic families are capitalising on reduced competition and falling prices in prime areas, overall transaction volumes remain significantly depressed [4].
Healthcare properties continue to demonstrate remarkable resilience due to the essential nature of healthcare services, which ensures consistent demand regardless of broader market conditions. This fundamental difference in demand drivers makes healthcare properties particularly valuable for portfolio diversification during periods of residential market weakness.
The vulnerability of prime residential properties—experiencing a 7% drop in sales, 13% decrease in buyer registrations, and average price cuts of 5%—creates a compelling case for diversification into healthcare assets. These assets offer more stable returns backed by essential services and demographic trends that are largely independent of economic cycles.
"By 2030, the entire baby boomer generation will have reached retirement age, increasing the U.S. population’s share of senior citizens (age 65+) to 20% (70 million) from 17% (61 million) in 2024." - CBRE
One of the most compelling attributes of healthcare property investments is their inflation-protection characteristics. Healthcare assets typically feature long-term leases with inflation-linked rent reviews, providing a hedge against inflation that traditional property investments often lack. This structural advantage has become increasingly important as investors seek protection against currency debasement and rising costs.
Healthcare properties typically feature lease terms of 15-30 years with operators providing essential services, and many include inflation-linked rent reviews that protect real returns during inflationary periods. This contrasts sharply with residential properties, which typically have shorter lease terms and lack systematic inflation protection mechanisms.
“UK commercial property rental values increased 0.2% in May and were up 3.4% compared to the same period last year, outperforming residential property price growth,” according to the IPD UK Monthly Commercial Property Index [5]. This performance demonstrates the income resilience of commercial healthcare assets compared to residential alternatives.
The primary benefit of inflation-linked lease structures is the preservation of real income value over time. As inflation erodes the purchasing power of fixed income streams, inflation-linked leases provide a mechanism for rental income to keep pace with cost increases. This feature is particularly valuable in the healthcare sector, where operational costs are subject to inflationary pressures from staffing, utilities, and regulatory compliance.
For HNWIs seeking to preserve wealth and generate reliable passive income in volatile economic conditions, this income stability offers significant advantages over residential investments, which are more susceptible to market fluctuations and economic cycles. Traditional property investments often lack adequate protection against inflation, unlike healthcare assets which typically feature long-term leases with inflation-linked rent reviews.
The regulatory environment plays a crucial role in shaping the healthcare property market, creating both challenges and opportunities for investors. Understanding these regulatory dynamics is essential for HNWIs considering healthcare property investments, particularly given their impact on supply constraints and long-term value appreciation.
New healthcare property developments face significant regulatory hurdles that limit supply growth and support valuations of existing assets. Care homes must comply with Care Quality Commission (CQC) standards, which mandate specific room sizes, facilities, and staffing levels. These requirements have increased construction costs and operational complexity, deterring speculative development and contributing to the supply-demand imbalance that supports occupancy rates and rental growth in existing facilities.
Planning permission for healthcare facilities has become increasingly challenging to obtain, particularly in desirable locations where land values are high. Local authorities often prioritise residential development over care facilities despite growing demographic need, creating a structural supply constraint. This regulatory environment favours existing healthcare properties with established operating licences and planning permissions, enhancing their long-term investment appeal.
The regulatory environment also affects operational performance through staffing requirements and quality standards. Care home operators must maintain specific staff-to-resident ratios and meet stringent quality benchmarks, which influence operational costs and rent cover ratios. HNWIs considering healthcare property investments should evaluate how these regulatory factors affect tenant sustainability and long-term lease security.
For investors, these regulatory dynamics create a favourable environment for existing healthcare properties with strong operators. The high barriers to entry protect against oversupply, while growing demand driven by demographic trends supports occupancy rates and rental growth. This combination of regulatory protection and demographic tailwinds contributes to the sector’s resilience compared to residential property investments.
Underpinning the investment case for healthcare properties are powerful demographic trends that provide structural support for long-term demand. The dominance of elderly care facilities in healthcare property transactions—accounting for 68% of the total in 2024 [2]—reflects investors’ recognition of the UK’s aging demographic profile and its investment implications.
Projections indicate that by 2040, one in seven UK residents will be over 75 years old, leading to increased need for care home beds and related services. This demographic tailwind creates a structural growth driver that is largely independent of economic cycles, contrasting sharply with residential property, which is more vulnerable to interest rate fluctuations, tax policy changes, and economic sentiment.
Regional variations in demographic trends are particularly important for healthcare property investment decisions. Coastal regions and certain suburban areas are experiencing faster growth in elderly populations, potentially offering stronger long-term demand fundamentals for elderly care facilities. Conversely, urban centres with younger demographic profiles may present better opportunities for private hospitals and specialist care facilities.
This demographic shift presents both opportunities and challenges for investors. The growing demand for elderly care facilities suggests a robust market for healthcare property investments, while the relatively static supply of care homes—constrained by high construction costs and regulatory hurdles—creates a supply-demand imbalance that supports sustained occupancy rates and rental growth.
For HNWIs with multi-generational wealth preservation goals, these demographic fundamentals provide compelling reasons to allocate capital to healthcare properties. The sector offers exposure to one of the most predictable long-term trends in developed economies—population aging—while providing stable income and potential capital appreciation. Many investors face challenges diversifying property portfolios away from cyclical residential assets towards more demographically-driven healthcare investments with stronger long-term demand fundamentals.
The healthcare property sector is experiencing increased merger and acquisition activity, with primary care REIT Assura being targeted by KKR and rival REIT PHP showing interest [1]. This consolidation trend signals strong institutional recognition of the sector’s value and growth potential, but also creates implications for private investor access.
The increase in M&A activity among healthcare REITs typically leads to more efficient capital allocation and potentially higher valuations across the sector. For HNWIs, this activity presents both opportunities and challenges—while it validates healthcare real estate as an attractive asset class, it may also reduce the number of publicly traded vehicles for accessing these investments.
“M&A activity has increased, with primary care REIT Assura being targeted by KKR and rival REIT PHP,” highlighting the institutional appetite for healthcare assets [1]. This consolidation trend potentially makes direct ownership structures like Single Asset Funds more valuable as they provide continued access to the sector without the volatility and reduced control associated with publicly traded REITs.
The M&A environment also suggests that institutional investors view current valuations as attractive relative to the long-term growth potential of healthcare assets. HNWIs accessing healthcare property through REITs face reduced investment control and transparency, with increasing exposure to M&A activity and consolidation. This challenge highlights the potential advantages of more direct investment approaches that maintain transparency and control.
For private investors, this M&A trend should be viewed as both validation of the sector’s fundamentals and a potential constraint on traditional investment options, making alternative access vehicles increasingly important for maintaining exposure to healthcare property opportunities.
"Healthcare real estate has emerged as a beacon of stability and resilience, underpinned by robust fundamentals." - Winston Warren
The diverging performance of healthcare and residential properties in the UK market presents HNWIs with important strategic considerations for their investment portfolios. While prime residential properties face headwinds from tax changes, interest rate pressures, and shifting demand patterns, healthcare assets continue to demonstrate resilience supported by demographic trends, inflation-linked income, and strong institutional interest.
The record £3.2 billion in healthcare property transactions during 2024 [1], combined with the 66% share of global investment flows from US-based investors [2], demonstrates the sector’s appeal to sophisticated institutional capital. This institutional validation, coupled with the 85% prevalence of portfolio transactions [3], creates both opportunities and access challenges for individual HNWIs.
For sophisticated investors seeking to optimise their property exposure, healthcare real estate offers compelling diversification benefits and income characteristics that address many of the challenges facing residential property investments. The sector’s inflation-linked income potential, demographic support, and regulatory protection provide a foundation for stable returns that can complement or replace traditional property allocations.
Investment vehicles such as Single Asset Funds provide accessible entry points to this market, enabling participation in institutional-quality assets without sacrificing transparency or control. As the residential property market navigates its current challenges—including the 7% drop in prime property sales and 13% decrease in buyer registrations [4]—healthcare real estate stands out as not merely a temporary refuge but potentially a core component of forward-thinking property portfolios.
To capitalise on this opportunity, HNWIs should consider the following strategic actions:
By taking these steps, HNWIs can position themselves to benefit from the healthcare property surge while mitigating exposure to the residential slump, creating more resilient property portfolios designed to weather market volatility and generate stable long-term returns. The sector’s combination of defensive characteristics and long-term growth drivers positions it well for investors focused on wealth preservation and stable income generation in an uncertain economic environment.
We observe a clear and fundamental shift in property investment, with the healthcare sector standing apart from the challenges currently facing residential markets. This isn’t merely a temporary divergence; it reflects the inherent resilience of assets underpinned by essential services and powerful demographic trends. We see the increasing focus from sophisticated capital, including significant overseas investment, as a strong validation of the sector’s long-term value proposition. For us, the stability offered by healthcare property, driven by predictable demand and reinforced by a protective regulatory environment, represents a core component of a robust property portfolio.
In a market increasingly defined by large portfolio transactions, we recognise the challenge this presents for high net worth individuals seeking direct access to institutional-grade assets. We believe transparency and control are paramount, which is why our approach focuses on enabling co-investment in specific, high-quality healthcare properties. This allows investors to benefit from the sector’s stable, inflation-linked income streams and defensive characteristics, providing a clear alternative to less transparent structures or the volatility seen elsewhere. We are confident that this focused, asset-specific strategy is essential for navigating the current market and securing long-term value.
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.
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