The Outlook For Health Development As An Asset Class

Health property development and investment is rapidly emerging as a specialist segment of the property market. At present several funds are investing in healthcare property, but focused on small-scale GP surgeries and local health centres. An estimated 20 specialist developers are meeting their property investment needs.

"At present several funds are investing in healthcare property, but focused on small-scale GP surgeries and local health centres. An estimated 20 specialist developers are meeting their property investment needs."

There is a clear trend for the NHS to become a commissioning/purchasing agent, rather than an actual supplier of services. Over the next 10 years, Wilky believes, this will lead to larger schemes. Through the Aldershot Centre for Health, Wilky Group is a first mover, aiming to create assets of £10m-£50m investment value and retain them in one or more investment funds with appropriate partners. 

Whilst the scale of ACH is exceptional, Wilky says it might be replicated in other locations when a range of local needs can be brought together in a single building.  More generally, however, Wilky anticipates a new generation of smaller centres, of up to about 70,000 sq ft, and with a value in the region of £5 to £15m. These might combine GP surgery facilities, stepdown/recovery beds and other specialist functions in a new kind of community hospital with 30 to 80 bedrooms. This model could well replace many old-style community and village hospitals now under threat because they have become uneconomic in their present form.

Wilky also foresees a market for health campus developments, rather like business parks, on the edge of city centres and serving other conurbations. Wilky has four health development sites under option, and are negotiating on others.  It aims to have 5-10 campuses secured and/or under development over the next few years, together with a number of smaller schemes,  and to undertake joint ventures with smaller-scale health developers.

Wilky is also looking closely at the nursing home market, albeit as developers rather than operators, and has two schemes where planning applications are being prepared.  One will be a second phase of development on the Aldershot health campus site, bringing the total built area close to 200,000 sq ft.  The second is on a stand-alone site of 1.2 acres.

Read More »