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London property slowdown could help capital catch up with healthcare facilities

Assura’ s Jonathan Murphy told The Standard there is a chance to improve London’s healthcare estate (Provided by Assura)
Assura’ s Jonathan Murphy told The Standard there is a chance to improve London’s healthcare estate (Provided by Assura)

A slowdown in the property market could help London catch up with much-needed investment in NHS infrastructure, the CEO of a £3 billion healthcare property trust has told The Standard.

Assura’s Jonathan Murphy said the capital had “the worst healthcare estates of anywhere in the country,” in part due to an industry-wide method of considering land valuations agreed with the NHS that works better elsewhere where values are cheaper.

“It’s because of this issue with the ‘Cost Plus’ model. There is a massive underinvestment in London and it needs to catch up at some point. Actually, a downturn, ironically, gives us an opportunity to do that.”

He said the NHS in London was “keen to have” the kind of bespoke doctors’ surgeries his company provides, but smaller developments and more retrofitting to convert older buildings was more typical in the capital. Lower land values lower could help bring better projects to life. “Those costs might come down a little bit with a recession,” he pointed out.

Assura designs and builds and manages community healthcare buildings, including GP surgeries and primary care facilities.

The FTSE 250 company has over 600 properties in a portfolio worth almost £3 billion, with 78 in London, valued at almost £400 million. It modernised the Benhill and Belmont surgery in Sutton on the site of the former Henderson Hospital, which treated shell shocked soldiers in World War II.

It is the kind of project that can help bring Londoners the kind of improved diagnostic services and outpatients facilities that are in place in much of the rest of the country.

Murphy pointed out that these developments are done “on an open-book basis, and thre NHS is fully involved all the way through,” to see how much the schemes are costing.

“No one builds speculatively. It’s not like the housebuilders, where they build and then find the occupiers. We do everything upfront, no one puts a spade in the ground until the NHS have signed.”

With London land values falling into a recession, it could help open up chances for more investment. “It will be driven by availability of finance at the NHS and us finding the rifht sites at the right price.”

The wider  drop in property values led to a 55% fall in Assura’s interim profit before tax of £30.9 million in the six months to September 30, but net rental income rose 15% to £70 million.

Shares in the Warrington-based company ticked up 1p to 57p on Tuesday.