Some USD200 billion will be invested into Healthcare Infrastructure over the next five years, according to a new report published by Octopus Group based on a global survey of institutional investors.
The investment opportunity is driven by the current shortage of good quality housing to suit later life which is urgently needed to accommodate the growing numbers of retirees and elderly, as highlighted in the research.
The report is based on a survey of institutional investors which had a collective USD6.8 trillion of assets under management. It revealed that the respondents which are already invested in Healthcare Infrastructure plan to increase their stake in the asset class by more than half over the next five years from 6.1 per cent, to 9.5 per cent by 2023, with ageing demographics supporting the investment case.
The number of people in the world aged 60 and over is set to rise from 962 million in 2017 to 2.1 billion by 2050. This growth is driving investor appetite for specialist, high quality accommodation and healthcare facilities, including retirement communities, care homes and doctors’ surgeries to meet the needs of retirees and the elderly.
The respondents to the report indicated that the UK is one of the most attractive regions for future inward investment into the sector. In spite of Brexit, more than seven in 10 of those investors surveyed which have yet to invest in the sector are still considering allocating funds to the UK, while 60 per cent of those global institutional investors surveyed, invested in Healthcare Infrastructure, already focus investments in the UK.
Benjamin Davis, CEO of Octopus Healthcare, says: “Not only is the ageing population growing, but the make-up of this group is changing beyond recognition. Improved quality of life in later years is transforming the way the over 60s live. This group is more active than ever before and have higher expectations than previous generations. Globally there is a significant lack of accommodation to cater to this varied group’s needs. This demographic shift is creating a strong investment opportunity for institutional investors.”
Nearly half of respondents (46 per cent) cite attractive risk-adjusted returns as a driver to invest with almost a fifth of respondents investing in the sector (19 per cent) experiencing over-performance.
Almost two-fifths (39 per cent) of those invested record between 10 per cent to 15 per cent returns over the past five years.
Two-thirds of respondents are attracted to the sector as an opportunity to diversify their portfolio and pursue an investment that has low correlation with broader financial markets.
Hiti Singh (pictured), Head of Institutional Funds at Octopus, says: “The expected end of the market bull run, coupled with heightened political risk across the globe, is driving institutions to alternatives in a hunt for returns. Alternatives and within this, real assets, meet institutional investors’ requirements for long-term, tangible investments.”
