Why consider investing in Medical Real Estate?
Around 1.5% of the world’s population, or approximately 58 million people, are millionaires, according to the UBS Global Wealth Report 20241. In the U.S., most of these individuals qualify as accredited investors under regulatory definitions, granting them access to exclusive investment opportunities that remain out of reach for the average person.
Historically, the best opportunities in real estate have been limited to a select group: wealthy individuals, institutions, family offices, retirement funds, and life insurers. However, recent years have witnessed the rise of a powerful concept—pooling modest investments from everyday investors to create significant investment capital. As a result, ordinary people are now able to diversify their portfolios and explore opportunities in commercial real estate.
These opportunities include medical buildings, a specialized sector with a long-term outlook. We explain those trends below.
Factors Influencing the Healthcare Real Estate Outlook
Healthcare real estate benefits from a variety of factors, including the need for spaces that support medical services. Properties are leased to medical professionals whose practices depend on maintaining a physical presence for their patient base, cannot work from home and most often in buildings with other complimentary medical services. Additionally, healthcare facilities cater to essential services required by people regardless of the state of the economy, which can create conditions for ongoing tenancy.
Accretiv Wealthcare Real Estate Fund plans to combine income from leased properties and potential property value growth into its *contractual 8% APY preferred return for investors2.
Long-Term Outlook
Healthcare real estate aligns with broader trends as explained below:
1. The Aging U.S. Population
- The U.S. is undergoing a demographic shift. The number of adults aged 65 or older is expected to increase from 22 million in 2022 to 82 million by 2050 - almost a quarter of the total population3.
- Older adults tend to spend more on healthcare than younger populations. Many retirees also relocate to Sun Belt states, where demand for medical facilities is growing.
- Accretiv targets investments in cities within these regions, aiming to capitalize on increasing demand for medical spaces.
2. Shifts in Healthcare Delivery
- Healthcare delivery has seen a shift from hospitals to outpatient facilities where more acute procedures are now being performed without the need for overnight observation. From 2000 to 2022, there was a 30% increase in the rate of outpatient visits.
- Outpatient visits dipped 10% in 2019-20 due to Covid but have since recovered to above pre-pandemic levels4.
3. Technological Advancements
- While telehealth has enhanced accessibility, many patients continue to prefer in-person consultations. About 80% of US respondents to a global survey said they would prefer in-person care5.
- Technological innovations have made it more efficient to perform certain procedures in medical offices rather than hospitals, which may drive demand for specialized medical real estate6.
A Smarter Way to Build Your Investment Portfolio
If your portfolio has relied heavily on traditional investments, exploring alternative investments may open a path to diversification. Our Accretiv Wealthcare Real Estate Fund, offers a contractual 8% annual percentage yield (APY)7. Accretiv Wealthcare Real Estate Fund offers a way to engage with healthcare real estate as part of a broader investment strategy. Isn’t it time to consider how this sector might align with your long-term goals?
To find out more about Accretiv Wealthcare Real Estate Fund meet the team on one of our webinars.
References:
- www.ubs.com
- Dividends are not guaranteed and are only paid out when and if earned. Alternative investments involve risk, including potential loss of principal.
- https://www.prb.org/resources/fact-sheet-aging-in-the-united-states/
- https://www.healthsystemtracker.org/chart-collection/what-are-the-recent-trends-in-health-utilization-and-spending/#Hospital%20outpatient%20visits%20per%201,000%20people,%202000-2022
- https://www.techtarget.com/virtualhealthcare/news/366597008/Despite-Preferences-for-In-Person-Care-Patients-Are-Open-to-Telehealth
- https://www.holonsolutions.com/the-growth-of-outpatient-care-technologys-role-in-shifting-healthcare-paradigms/#:~:text=Technology%20has%20played%20a%20pivotal,ideal%20for%20an%20outpatient%20setting.
- Dividends are not guaranteed and are only paid out when and if earned. Alternative investments involve risk, including potential loss of principal.
