The conclusion of 2023 witnessed a significant uptick in investments by real estate investment trusts (REITs) in healthcare properties, driven by the opportunity to capitalize on an aging populace with escalating medical needs.
Healthcare real estate, although a specialized domain within the broader real estate landscape encompassing hospitals, assisted living facilities, and rehabilitation centers, often amalgamates features from conventional sectors such as office, multifamily, and retail, presenting a distinctive investment avenue.
This segment is garnering heightened interest from REITs, spurred by the burgeoning demand for medical services as the baby boomer cohort advances in age. By 2030, projections from the U.S. Census Bureau anticipate that 73 million baby boomers will surpass 65 years of age, marking the onset of the “gray tsunami,” with approximately 10,000 individuals from this demographic crossing this threshold daily. Furthermore, prolonged life expectancies and historically low birth rates are poised to recalibrate the age demographic, with forecasts indicating that older adults will outnumber those under 18 by 2034, a first in U.S. history.
During the fourth quarter of 2023, REITs redirected their attention towards segments exhibiting robust income growth, notably healthcare properties. Within this sphere, there was a notable 7.6% surge in same-store net operating income growth compared to the corresponding period in 2022, culminating in nearly $2 billion in net acquisitions of healthcare properties during the final quarter of the year.
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