UK pension funds are increasingly diversifying their real estate portfolios by moving into the healthcare sector, as they remain under pressure to match their liabilities against long-dated income.

In its Healthcare Capital Markets — 2018 report, Knight Frank has outlined how this will translate into pension money supporting the development of new care homes in the UK, which suffers from a chronic undersupply of healthcare accommodation for the elderly.

The company’s consultancy division has said that fixed-income deals will dominate care home provision in the short– to medium–term, with a surge in propco [property company] transactions. “We will subsequently witness more companies splitting their models into propcos and opcos [operating companies],” says Knight Frank.

“This will harden if a few talked about opco sales at healthy multipliers gain traction. Opco values are tangible but the UK still awaits a pure opco to transact and set a prec