Housing plus: Why social infrastructure is key to unlocking the benefits of regeneration
Investments in key social infrastructure, such as healthcare, are critical to the success of new housing developments to meet the needs of a growing and ageing population – and they can also provide stable, inflation-tracking income to investors.
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In this third article in our series exploring investment and impact in UK real estate, Christopher Santer, Fund Manager, Positive Impact Investment, Real Estate, discusses social infrastructure needs created by new housing developments, with a particular focus on primary healthcare. Specifically, the article covers why these assets are critical to realising the long-term economic and social success of new housing projects – and how they could enhance investor portfolios.
In the first two articles in our series, we have detailed the urgent need for new housing development in the UK – and the social and economic benefits of investing in regeneration projects that incorporate new residential housing provision in urban centres, especially those outside of the Southeast.
By some estimates, the UK has a shortfall of four million homes – and the current government has set a target to build 1.5 million homes over the next five years, with a focus on redeveloping ‘brownfield’ sites in urban areas.
But building new homes is only one part of the equation. New homes also create additional local needs for social infrastructure to help communities develop and function, and to serve the people living in them, such as doctors’ surgeries, social care facilities, schools and nurseries, among others.
Failure to meet specific needs created in relation to essential social infrastructure risks making new houses an unattractive prospect for many potential residents – or even, not getting approval to develop them in the first place.
For example, a lack of local school places would be a significant deterrent to families, while a lack of local nursery spaces would pose specific challenges for families with two working parents. In relation to healthcare, a lack of capacity in community doctors’ surgeries is a negative for any potential resident – and poor social care provision is problematic for elderly residents, which is especially notable in the context of our ageing population (see chart).
The UK’s population distribution is changing – and getting older
Source: Office for National Statistics, 2024.
These needs are enshrined in the government’s new National Planning Policy Framework, which sets “golden rules” for new planning applications to be approved, including “necessary improvements to local or national infrastructure”. However, these rules only apply directly to developments on land released from the rural ‘green belt’, meaning there is still a significant gap that can appear for developments on brownfield or ‘grey sites’ in urban areas.
Healthcare in focus: Local needs and national pressures
Foremost in the minds of many in relation to the social infrastructure needs created by housing development is primary healthcare. Specifically, this relates to concerns about the pressure on services that could be created in areas where existing doctors’ surgeries may already be at or above capacity, or in relation to a lack of community healthcare in close enough proximity to new developments that do not have a doctors’ surgery in easy reach.
Importantly, these local pressures add to, and are exacerbated by, broader pressures at a national level.
The NHS, based on guidance from the Royal College of GPs, considers standard provision within a population as being one general practitioner (GP) doctor for every 1,800 people. According to data from British Medical Association, as of December 2024 the average full-time GP is now responsible for 2,260 patients.
Based on that same NHS guidance, a doctors’ surgery employing five full-time GPs would meet the needs of around 9,000 residents within a community, which is equivalent to around 3,800 homes based on average national household size. To put this in the context of the ambition to build 1.5 million new homes in the coming five years, this would imply a need for approximately 400 new primary healthcare facilities.
Clearly there will be cases where there is existing capacity in areas where housing is being built – and the figures are complicated by the fact many ‘new’ residents moving into newly-built homes will not be ‘new’ to the area. But this still gives some idea of the localised demand that can be created for services that are already, in general, stretched.
It is also worth noting that pressures on community healthcare are most acute within certain regions and can reflect wider regional inequalities. For example, a report by Future Health in 2022 identified integrated care systems in which primary healthcare services are under significant pressure, highlighting areas with significant urban populations and often higher relative levels of deprivation, such as Kent and Medway, Leicester, Leicestershire and Rutland, South Yorkshire and Cumbria.
Catalysing the wider benefits of regeneration
It is easy to see why the issue of social infrastructure can be such an emotive topic for new housing developments. Failure to properly consider this can have significant consequences for local communities – and it is often a cause of local hostility to, or even outright rejection by planning authorities of, new planning proposals.
Addressing this should be about more than simply meeting minimum service provision, too. For example, and continuing the discussion around primary healthcare, there is evidence to suggest that sensitive incorporation of services into the heart of new developments can enhance broader economic and social outcomes, and so support the successful realisation of regeneration projects, especially in urban centres.
At a basic level, there is a direct link between local healthcare spending and economic outcomes. For example, the NHS Confederation has estimated that increasing spending on local primary care services could produce an average 31% return on investment and an average net saving of £26 million for integrated care systems. This is achieved through reducing admissions to, and so spending associated with, secondary care services such as hospitals.
Looking more locally, bringing primary healthcare services that are often located outside of town centres back into these community hubs as part of redevelopment efforts could support the broader ambitions of regeneration. Consider the following, from a separate report published by the NHS Confederation on the role healthcare services can play in supporting economic and social recovery on UK high streets:
“Building health into the high street has multiple benefits. It can play an important role in addressing health inequalities, offer much-needed additional capacity for health service delivery and attract more people into their local high street, while encouraging healthier lifestyles. Not only would more people visit and use high streets, the types, ethos and diversity would change. Those who may not use high streets regularly to shop would, for example, use them to attend health services, making more vibrant community spaces.”
Role of private capital
Private capital can clearly play a key role in delivering social infrastructure, either directly by incorporating investment into these critical assets into mixed-use project planning from the outset, or by investing in new or upgraded premises situated within new developments that have otherwise failed to address this need.
From an investment perspective, the benefits of investing in this real estate alongside the residential housing they support are equally clear. Using the example of a GP practice, doctors enter into NHS contracts to provide services to the local population, and one of the ways in which they are remunerated is being ‘reimbursed’ by the NHS for the rent they pay to third-party landlords.
This means that an investor can gain exposure to long-term, consistent and income-based returns that are in-line with the target returns from residential property. In addition to these potential financial returns, investing in social infrastructure can provide valuable diversification benefits to portfolios by providing differentiated exposure alongside the residential housing developments it supports.
An example of how this can work in practice can be seen in the standalone delivery of two new local GP surgeries in towns in Northeast England. These new buildings will replace existing premises that are around half the size needed to serve the c.14,500 patient lists, with further expansion needed due to the 5,000 new homes being delivered through a new housing development nearby, within which no new GP surgery was delivered.
In another example in Southern England, a new housing development comprising of around 4,000 new homes was only given the go-ahead after the developers committed to delivering a range of key social infrastructure to serve the new local community, including a new primary school, doctor’s surgery and enhanced care services.
Housing plus equals a range of potential benefits
We have shown that new housing developments create significant local needs in relation to social infrastructure – with our article focusing in particular on primary, community-based healthcare facilities, but also discussing schools, nurseries and care facilities that are necessary to serve a growing and ageing population.
We have also shown how these local demands exacerbate pressures that already exist, and that are growing, at a national level.
Investing in this social infrastructure could bring a host of additional benefits, including importantly supporting broader regeneration ambitions and economic outcomes. To put it simply, without adequate social infrastructure new housing developments will not attract a diverse and economically mobile community of residents.
In the context of healthcare specifically, targeted economic benefits can be realised by alleviating pressure and reducing spending on secondary healthcare that is already in need of significant investment. Moreover, by incorporating primary healthcare into mixed-use developments in urban centres, there is additional potential to create more vibrant community hubs that catalyse broader, positive local economic impacts.
For investors, there are obvious potential financial and impact benefits on offer by investing in these necessary assets, which can provide long-term, stable and inflation-tracking returns. Moreover, there are diversification benefits that can arise from investing in social infrastructure that is directly related to – and exists in a symbiotic relationship with – housing developments through which they are gaining residential property exposure.
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