Property Interview: Pinsent Masons partner on the changing face of healthcare
AS we are frequently told, the UK has an ageing population and the provision of care for older people is high on the agenda.
Partner at Pinsent Masons in Leeds, James Long, is a specialist in private healthcare investment, acting for funds who purchase primary care centres, care homes and other specialist health care units.
With more people living longer, there is a bigger requirement for elderly care provision and the care home industry is becoming a lucrative one, especially as the overstretched NHS looks to find space for older patients requiring longer term care.
Investment vehicles backed with international money invest in care homes and operators on a regional basis, and this is becoming more frequent according to Mr Long.
London may be where the money is, he said, but it is coming up North and elsewhere in the UK. “The healthcare property market is less mature than buying of offices, industrial or retail,” he said.
“The process of buying offices for example can be simpler, you know you have income. A doctor’s surgery, backed by the NHS, means they will reimburse rents, but it gets more complicated, so that’s where specialist funds step in.
“Investors are worried about the lease as well as the business itself. But this is changing, it is becoming more mainstream for large investment funds such as AXA and L&G to get involved.”
Mr Long said that five years ago property firms would have said there was no point in investing in or building more care homes.
“One element can have a catastrophic consequence with,” he said.
“The care home business itself can be tricky,” he said. The National Living Wage means it may be difficult for particularly smaller care homes to operate, as there are so many people working in care homes who are earning below the stipulated wage level.
With a high profile history of mistreatment by care homes, such as in the 2014 Panorama expose, it means they can be a riskier investment.
In Yorkshire, with a health sector that is growing everyday, and with operators like Nuffield Health Orchard, and the LNT Group on the scene , there are increasing numbers of private providers, as well as major NHS trusts.
“The region is strong in health and medical research industries,” Mr Long said, “there are pockets of development here, where land and construction costs are lower, though you can still get more per bed in the South than the North.”
Mr Long said that care villages might be a way forward for the sector, developments which are already prevalent in the US and France where markets are more mature.
“There is still stigma attached to some care homes as well, care villages mean people can move from one community to another, some of them are more like hotels these days.” So this may be the future of care in the UK.
