Future trends in healthcare real estate

HEALTHCARE
Tim Harrup

One of the hottest new domains in real estate over the past few years has been healthcare. From niche to mainstream, it is now interesting both companies which are specialists in this particular area, and general investors/developers. It is therefore of no surprise that at last month’s ‘conference only’ Mipim event in Cannes, one of the topics was entitled quite simply ‘What’s hot in Healthcare and Nursing?

Starting the presentations was the Korian group, which operates over 1,000 healthcare buildings in 7 countries. Frédéric Durousseau, Chief Real Estate and Development Officer at Korian Group, stated that healthcare was clearly further thrust into the limelight by the Covid pandemic, and that the future is rich in innovation and new concepts. The growing population of elderly people and their risk of isolation is one issue, and Covid is another: ‘Covid is here to stay and we have to live with it’. Healthcare development thus have to be considered within this context. The pandemic has accelerated a strategy which includes alternative healthcare solutions. Factors to be taken in to account also include the desire of older people to remain at home for as long as possible. ‘The future is not in isolated retirement homes in rural areas. The future is in people benefiting from local healthcare services in their own homes. So clinics need to be nearby’. There is also increasing regulation in the domain, including the requirement to reduce the environmental footprint of buildings. Healthcare buildings obviously consume more energy than other buildings. Modular off-site pre-construction is one of the answers to this issue.

Where investment is concerned, Fréderic Dib, founder of MoZaïC Asset Management, said that interest is further growing, but pre-dates the pandemic. And while significant yield compression is being seen (and will continue), this sector still represents a premium over others. There is a trend for international investment, starting, said MoZaïc, with the Belgians. This will continue when it is recognized more widely that this really is a pan-European market. Because it is still a relatively small segment, a small move away from offices – which is being seen in these home-working times – can have a major impact on the healthcare segment. MoZaïC also issued a warning: this is a hotting market and we have to make sure it doesn’t overheat with silly investments…

In another presentation, Jan Garde, founder of ‘The Embassies of Good Living’, a start-up, outlined a concept it hopes to deploy. This involves, in general terms, including senior living accommodation within a wider community occupying the same premises: offices and co-working spaces for residents, on-site services for the elderly and so on. This is designed to prevent loneliness and to enable the elderly to remain within social communities. These ‘Embassies’ are in fact a sort of club with all the different types of members. ‘All of the people are together in one house and interact with the outside world’.