Medical properties were once considered a niche sector of the market which wouldn't necessarily appeal to investors. However, in recent years, industry experts have revealed a surge of interest from buyers seeking to acquire healthcare properties, spurred by low interest rates and the guaranteed income in this sector.
Added to this, the newer medical centres are usually larger, with a higher investment yield. Another factor has been the 2012 Health and Social Care Act, placing more emphasis on primary care level healthcare provision.
Benefits of Investing
Suddenly, this has become a great time to invest in the medical sector property market, with investors realising the commercial potential of the opportunities.
The lease granted for a GP's practice, for example, is normally for a 20-year term or longer, while the chargeable rent is usually in line with the amount paid previously by the Primary Care Trust. Sometimes, a small adjustment is made to take into account the different repairing and insuring liabilities. Hence the rental income is considered to be secure.
Healthcare assets can also include care homes, nurseries, day units, pharmacies, hospitals, dental practices, retirement villages, assisted living units, mental health units, physical disability units and brain injury facilities.
The investment opportunities occur in a situation where the property is sold by the long leaseholder or freeholder. In some cases, it can be a commercial developer, who, having completed their new development, wishes to sell the property to make a profit, with the medical practice being the tenant.
On other occasions, it may be the case that a doctors' practice that owns the freehold interest wishes to sell it, while remaining in occupation through a lease. This is known as a sale and leaseback transaction.
Factors Affecting Value
The price can depend on a number of variables that affect the property's value, such as its location, the age of the building and its specification. Hence the lease's terms will be crucial to determine the true value of an investment property.
Usually, the investment value increases in line with the length of the lease term. The longer the lease, the better in investment terms.
For professional advice on investing in the medical sector, speak to our friendly and knowledgeable advisors here at Prideview Properties. Don't hesitate to contact us to take full advantage of our range of services.