Andrea Auteri

The UK senior living and private medical markets remain a focus for investors, with overseas funders particularly drawn to the market.

Sarah Skuse, partner at Bevan Brittan, speaking at last week’s Healthcare Summit in London, revealed that, in the first quarter of this year, 70% of investment in the sector was by North American REITs.

Most are attracted to the UK’s significant supply/demand imbalance in the care home sector.

Andrea Auteri, managing partner at Elevation Advisors, said it had raised its third credit fund, worth £270m, to cover the next few years and has restructured its REIT as an open-ended fund, focused primarily on the aged and elderly care markets.

There are a handful of operators who control the market currently and I think more consolidation is expected, particularly in aged and elderly care, but also in private hospitals to address the NHS outpatient waiting list backlog

“We have seen a huge volume of activity driven by US listed REITS looking at the undersupply opportunity and to do social good,” he added.

But hurdles remain – primarily the UK’s high gilt yield and the ‘clunky’ planning process.

Auteri said: “We have a massive opportunity as a country to attract foreign investment, but the elevated gilt rate and structural inflation is a problem for international funders.

“There are a handful of operators who control the market currently and I think more consolidation is expected, particularly in aged and elderly care, but also in private hospitals to address the NHS outpatient waiting list backlog.”

Bruce Walker, country manager for the UK at Aedifica, said investors were looking for a mix of management deals and OpCo/PropCo models and this was creating liquidity in the market.

But he called for improvements to the planning process in the UK to increase activity.

He said: “The slow and clunky planning process is really frustrating.

“We have old properties we need to redevelop, and the return on investment is huge because we own the land. But getting planning consent takes so long and it’s such a barrier and does not need to be.

Sarah Skuse

“What underpins the UK market, particularly the elderly care sector, is a desperate undersupply of beds, with zero additional beds in the last 10 years.

“All developers would pay higher fees to get planning decisions through quicker. It is a real barrier to getting activity going.

“If that was more efficient there would be no shortage of activity.”

We have a massive opportunity as a country to attract foreign investment, but the elevated gilt rate and structural inflation is a problem for international funders

Kevin Beirne, head of retirement living at Octopus Capital, said the company had recently launched an office in Madrid, taking its UK expertise to a new market.

“When you scrape the surface there is an opportunity on the continent,” he said.

“If you are thinking about a development strategy, Spain has a similar demographic, but build costs are more predictable.

“They are also pushing public land into the senior living space and there is great leadership at a political level.”