Sector analyses and in-depth industry research have shown, time and again, that medical real estate properties are increasingly an attractive investment proposition to investors. The number of transactions in this part of the global property market has been rising for years, largely driven by healthy demand and fast-growing demand in numerous regional and local markets.
The high and increasing demand for medical real estate is a growing appetite for healthcare and medical services, which is powered by rapidly changing demographics. In the last ten years, the age group of people aged 65 or older has risen by more than a fifth. It is anticipated that, at the end of the next decade, more than a fifth of the population in developed nations will be older than 65, which is the age group that requires – by far – the most healthcare-related products and services.
Another major factor that drives the increasing demand for healthcare services is the rate of population growth, which is in a steady decline across the world. In the last few decades, couples have been having fewer children and, as a result, the average family size has gone down. With fewer family members to care for elderly family members, the current and future aging generations depend more on private healthcare services. This will inevitably increase demand for assisted and independent senior living centers.ry is more linked with a room rather than its size.
The medical real estate ecosystem is so diverse and so vast that many of our clients are often not sure where to begin, as the opportunities are endless. Think of hospitals, medical office buildings, diagnostic services, surgery centres, outpatient rehabilitation, wellness & prevention, skilled nursing facilities, orthodontic offices or oral surgery offices, just to name a few.
The buildings, offices, and campuses that are leased to members or organizations within the healthcare community should be in a location that continues to have its appeal in the long term. The properties may offer all the latest features, if they are too remote, cut off from major traffic lines and difficult to reach, their value may never exceed any fixed ceiling value. After all, medical specialists can expect their patients or clients to make relatively short trips to see them but older, less mobile patients cannot be expected to travel to remote or rural areas.
Because the location is so important, and a healthcare property should not be built in a region or location that is too remote or cut off from public transport, investors should not merely focus on the cheapest land available, although tempting. Slightly more expensive, valuable plots of land, closer to inner cities and rural areas, should be considered. Rodschinson has years of experience finding and identifying the right locations, and to strike a challenging balance versus acquisition costs and long-term growth potential in the right location.
For any medical property to succeed, sufficient operational expertise is required, in order to address the needs of the medical institution in question, and to assure long-term and sustainable rent and other income. Rodschinson helps to source suitable partners that have a long and established track record of shining and succeeding within their respective industries. Proper scrutiny and due diligence are major factors during this process.
Any investors in medical real estate should make sure ample attention is paid to the size and layout of the property: in other words, the suitability for its function and purpose. This does not necessarily mean the building(s) should be enormous in size – for example, a physiotherapist practice does not require too much space – but a number of factors need to be calculated in, in order to achieve operational success, including spacious, wheelchair- friendly corridors, lab facilities, waiting area(s), parking facilities and cleanrooms. Some properties may not need to feature all of them, but the building(s) in question should be versatile enough to make these adjustments, if necessary.
A range of different medical facilities, such as acute care hospitals or regional or local walk-in clinics, are often backed by public funding, particularly in the more developed markets of Western Europe. The dedication of these public funds provides the investor a certain degree of protection, as local or other authorities would work hard to prevent a failure on the side of the operational entity. Therefore, many medical properties are considered an extremely safe and relatively low-risk investment in the long term; after all, it takes quite a storm to bring down a regional hospital.
Other than for example office or residential properties, medical real estate is relatively recession-proof and free from macro-economic downturns, as medical needs continue to exist, regardless of the state of the economy. If anything, the recent and ongoing Coronavirus pandemic has demonstrated the absolute vital role that many healthcare and medical facilities play in the daily lives of millions. Combine this with public funding and a degree of regulatory protection, and many healthcare investments should be seen as free from economic cycles that so easily rock other asset classes within real estate.
Our globally trained and internationally focused team of experts would be delighted to explain you more about what we do and happily share our achievements so far. An in-depth and tailored look at your portfolio needs and investment wishes could give you a good understanding of current opportunities within the market, whether that is close to home or further afield. Please get in touch today.