$25 Billion to be Invested in Healthcare Real Estate in 2022

$25 Billion to be Invested in Healthcare Real Estate in 2022

Commercial News » La Jolla Edition | By Michael Gerrity | April 19, 2022 8:36 AM ET

Majority of Investors Plan to be Net Buyers of U.S. Healthcare Assets

According to a new CBRE survey, investors are planning to allocate more capital to healthcare real estate in 2022, highlighting rising confidence in these resilient asset classes, including life sciences real estate, medical office buildings, and ambulatory service centers.

The CBRE survey found that most investors (85%) believe healthcare real estate to be recession resistant, up from 80% who held this view in 2021, and 84% plan to be net buyers of assets in the sector this year. In 2022, investors have allocated 57% more capital to healthcare real estate when compared to 2021, with CBRE estimating a total of $25 billion in equity to be deployed into the sector this year.

Nearly half of investors (48%) said their healthcare property portfolio had suffered no impact due to the COVID-19 pandemic, with 35% indicating they had experienced minimum impact. Only 6% of investors said that the pandemic had severely impacted their healthcare properties.

"Healthcare and life sciences have been historically resistant to economic downturns and continues to be seen as a safe-haven for real estate investors during times of economic distress," said Chris Bodnar, Vice Chairman and Co-Head of Healthcare & Life Sciences Capital Markets at CBRE. "As a result, investors continue to allocate more capital to these properties, which provide stability and consistently strong yields."

Other Key Market Highlights:

  • Nearly all (99%) investors identified medical office buildings as their most desirable healthcare product type for investment in 2022. Ambulatory surgery centers saw the largest year-over-year increase, with 88% of investors indicating interest in this product type, up 17% from 2021.
  • When asked specifically about the life sciences sector, biotech/research & development (69%) is the preferred property type for investors in 2022. The popularity of these assets is driven by a jump in funding for R&D, technological advancements in data processing and gene sequencing, and strong demand drivers such as an aging population and the need to stymie rising healthcare costs.
  • Most (81%) investors indicate their preferred portfolio transaction size is below $250 million. Specifically, 90% of both developers and private capital investors are targeting investments below $250 million.
  • Banks remain the most popular financing source for life sciences and health care properties (83%), followed by life companies (45%).

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