One of my lifelong passions is to see the UK’s retirement market flourish. That’s not purely down to self-interest – although I admit I’ve mentally earmarked my choices. It’s because I truly believe that we should all be in a position to make the most of our later years.
So, I welcome the findings set out in the latest institutional trends report commissioned by Octopus Healthcare. Collating the responses from 100 investors worldwide, it shows a hearty appetite for the development of healthcare infrastructure and highlights a $200 billion investment potential over the next five years – which is good news for all of us.
Understanding the opportunity
Healthcare infrastructure is broad, covering the development, build and management of provision that includes GP surgeries, retirement communities and care homes. It’s also a complex and rigorously regulated area which can be tricky for investors with little experience in healthcare real estate to navigate.
But as the report makes clear, with the right partners, knowledge, and consistent approach, this is a field that offers sound investor opportunity and profound benefits to society.
As innovative investors, the healthcare sector is one we’ve continuously championed. We’ve been able to develop expertise and excellence through first-hand experience and embrace fellow investors with enthusiasm. From a personal standpoint, I’m particularly interested in what the report means for retirement living – an area I’ve dedicated myself to, over the last 15 years.
A shift in consciousness means there’s a desire to ‘invest with purpose’. And projects that fulfil environmental, social and governance (ESG) criteria tick a number of boxes. Not only are they a sound alternative asset to invest in against a backdrop of market unpredictability – but they’re socially responsible too. In fact, one in three investors said that ESG considerations played a significant role in healthcare infrastructure ventures.
Defining retirement care for the 21st century
Although retirement communities aren’t new, they’re not as well established here as they are elsewhere. That’s despite over 65s making up 18% of the UK population [1], by 2037 that percentage will rise to 24% [2] and to 26.5% [3] by 2066. Faced with an ageing population and a health and social care system under pressure – perhaps it’s time for a rethink.
Our solution is simple – create desirable homes that retired people want. Facilities should be wide ranging but practical – fulfilling lifestyle goals and adaptable to changing care needs. It’s a vision we work hard to realise as projects such as our Wadswick Green development show.
Benefitting society, benefitting investors
Demographics have encouraged investors to think beyond traditional assets and 56% list it as the key driver for investing in healthcare infrastructure. But as it stands, retirement communities in the UK have a market penetration rate of just 0.5%.
To get an idea of the opportunities and potential, we can look to Australia [4] and the US [5] where retirement community models have a firmer foothold. Market penetration rates in both countries are just over 5% in spite of a lower percentage of over 65s (15% respectively).
While established markets give us an indication of the investment possibilities and a framework for getting there, we need to stay mindful of where the UK market is right now. For me, it’s not about leaping in feet first simply because the potential is there. It’s about taking a measured approach in order to deliver genuine choice and quality.
The way forward
Thanks to the convergence of demographics and market conditions, the institutional report shows healthcare infrastructure provides the opportunity to invest in real assets with long-term stability. As this arena opens up, it’s more important than ever for those of us who understand this sector to uphold the standards of excellence that we’ve set ourselves. Because we all deserve the right to say, our last home is our best home.
Written by Kevin Beirne, Retirement Director
To read our full Institutional Investor Report click here.
