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Property Investment

Specialist Property Investment Will Top £15bn This Year

Investment in specialist property is set to top £15bn by the end of 2017, according to a new report by Knight Frank, as investors seek long-term, safe investments with the prospect of Brexit looming.

In 2016, £12.7bn – more than a quarter – of investment was in specialist property; a new high for the UK. This year’s figures look to go even further, with higher investment volumes forecast in all five of the key specialist property areas.

What is specialist property?

Specialist property is not your standard residential or commercial property – it’s split into five important areas:

  • Healthcare. This is one of the fastest growing sectors across the globe, and £6.3bn has been invested into specialist healthcare properties in the last ten years alone (with more than 80% of that coming in the last five years). These properties include independent hospitals, care homes, dentists, surgeries and retirement villages.
  • Hotels. From inner-city corporate hotels to sprawling country houses, £3.4bn has been invested into specialist hotel property in 2016.
  • Automotive. These investments typically include petrol stations, car dealerships, car parks and motorway service stations. £0.8bn was invested into this sector in 2016 – the highest on record.
  • Student. University remains an attractive prospect for young people, and student housing is always in demand. £3.1bn was invested in specialist student property last year.
  • PRS. With £5bn invested into the Private Rented Sector last year, it’s easy to see why this is an attractive prospect for investors.
Volumes affected – but not due to lack of demand

As expected, the geopolitical uncertainty and instability facing the UK has affected specialist property volumes – they fell for the first time since 2009 last year. But this wasn’t because of lack of demand or appetite on the part of investors. In fact, many investors were put off from investing because of the supposed lack of available assets in their chosen specialist area.

Specialist property has a reputation for being a secure, long-term investment – something that many investors will be looking for if Brexit negotiations continue to be so bumpy. The durability of the income from these properties will be essential, and the outlook looks very positive. With capital growth expected to slow across a number of key commercial property sectors, investment in these specialist assets will start to look very attractive to investors, with income returns topping 5.7% last year – higher than many traditional commercial sectors.

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Alex Wright, Editor