Paul Bridge, chief executive of Social Housing for Civitas Investment Management, said the need for more social housing has been exacerbated by Covid-19.
A lack of social care and underwhelming budgets have caused a structural deficit between the number of young people requiring social housing and the existing infrastructure.
But with this need for more social housing and care provision comes the opportunity for investors to benefit from this growing area of infrastructure development, he said.
Kenneth Mackenzie, investment manager of Target Healthcare real estate investment trust, agreed that “future-proof” infrastructure such as social care benefits investors, because it is an efficient investment in high-quality underlying assets.
More investors want their investments to make a positive difference.Brodie-SmithHe said clients can invest in assets that enhance living conditions, fill the gap in social infrastructure caused by Covid-19, as well as providing capital growth for their investments and "stable returns".
Moreover, it has a positive social impact, which would make it appeal to investors seeking an environmental, social and governance aspect to their portfolios.
Annabel Brodie-Smith, communications director of the Association of Investment Companies, said: “More and more investors want their investments to make a positive difference as well as a financial return.”
She added, “Investment companies are perfectly placed to make this happen.”
This is due to the ability to invest long-term in a “diverse range of assets, from homeless accommodation to social enterprises” said Brodie-Smith.
According to Jura Capital and the Impact Investing Institute, the strategy is already well-established, with investment companies making social impact investments now managing £3.9bn of assets.
Later life infrastructure
Infrastructure developments are also badly needed for later-life care.
Life expectancy in Britain has steadily increased over the past decade, even though it is seeing a slowdown currently.
Figures from the Office for National Statistics show life expectancy in 2017-2019 was 79.4 years for males and 83.1 years for females.
Andrew Cowley, managing partner at Impact Health Partners, said: “In the UK, we see sustainable growth in demand for elderly care.”
This increased demand for elderly care faces constraints from local councils tasked with the provision of social housing.
[This can bring] significant social savings for government and sustainable returns for investors.Jeremy RogersOfficial statistics show in the financial year ending 2017, the UK spent £264bn on welfare, 34 per cent of all government spending.
Local authorities then have a duty of care to residents, providing social housing for those who are unable to afford it.
This is why investors can also benefit from the shift in landscape following Covid-19 by investing in elderly care.
According to Mackenzie, the long-term, conservative focus and the diversified income available in elderly care targets positive social impact and a stable, long-term return for investors.
Jeremy Rogers, chief investment officer for Big Society Capital, commented: “The central theme is the ability to have significant and lasting social impact, alongside generating significant social savings for government and sustainable returns for investors.”
Some 20 per cent of Big Society Capital’s net asset value (NAV) is invested in the Charity Bond Support Fund. This fund focuses on regulated social sector organisations targeting positive impact for vulnerable groups.
Joy Brooks-Gilzeane is interning with FTAdviser
