Asset & Property Management
Healthcare Has Become One of the Hottest Sectors in the Real Estate Industry, But Risks Are Being Overlooked
Posted August 19, 2014
Becker Hospital Review’s recent article
“20 healthcare investment niches and 3 things to know: The evolution of healthcare as an investment area”
refers to healthcare real estate investment as healthcare “lite”, and like the beer of the same name the market sector is as frothy as it’s ever been.
Over the last 20 years, the healthcare real estate industry has evolved from the margins as an ignored (and even maligned) sector to become one of the hottest sectors in the real estate industry. Funds are rushing to the outpatient facility field, as investors are attracted by demographic trends, healthcare reform, and the reliably consistent income stream delivered by well-conceived healthcare real estate assets.
As is so often the case with any rush of new entrants to a complex investment environment, the risks of misplaced expectations are often compounded by a lack of experience. Despite the trend of some investors and investment managers to paint the outpatient sector with a broad brush when gauging risk, investors should heed the admonition that each facility has a different risk profile, which is affected by a host of idiosyncratic real estate and healthcare market criteria. It appears to many long-term observers of the market that some risks are being overlooked in the rush to deploy capital in the healthcare real estate sector.
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