Institutional Investors to Pump $200B More Into Healthcare Infrastructure

By Fred Donovan

December 10, 2018 – Global institutional investors are forecast to increase their investment in healthcare infrastructure by $200 billion over the next five years.

For its report, the Octopus Group surveyed more than 100 global institutional investors with a total of $6.8 trillion in assets under management.

The institutions said they currently allocated 6.1 percent of their investment portfolio to healthcare infrastructure but expect that allocation to rise to 9.5 percent over the next five years.

Around 37 percent of respondents expect to boost allocations to healthcare infrastructure investment by up to 10 percent over that same time period. Insurance companies will increase their allocations more than any other type of investor.

“The investment case for healthcare infrastructure is already resonating with institutional investors. Across region and investor type there is demand for opportunities to allocate funds to the sector,” the report observed.

More than half of respondents said that demographics is the key driver for investing in healthcare infrastructure.

Around 71 percent of global institutional investors said their healthcare infrastructure investments are performing as expected or better than expected.

For UK institutional investors, 22 percent said their healthcare infrastructure investments are overperforming. Close to one-quarter of UK respondents said they plan to increase allocations, and one-quarter plan to do so by more than 10 percent.

Asian respondents had the highest level of current allocations to healthcare infrastructure, 10.6 percent, and will invest the most into the sector of any other region in the coming years. They said they expect 12.1 percent of their portfolio to be allocated to healthcare infrastructure in the next five years.

Australian investors plan to increase investment by the largest margin. Although Australian investors have a relatively low current investment allocation to healthcare infrastructure at 4.1 percent, this is expected to increase by 5.3 percent over the next five years to 9.4 percent.