Gyms lead 'alternative' property investment amid health boom

Health and fitness centres are in high demand amid an explosion of low cost gym operators, new research into “alternative” property investment shows.

Key growth has been driven by the budget operators such as PureGym and The Gym Group. Picture: The Gym Group

Business property specialist Christie & Co found that gyms and health clubs are the most attractive leisure segments to alternative property investors, appearing to be less exposed to economic pressures which have hit other sectors.

This comes amid the expansion of low cost gym operators such as PureGym and The Gym Group, which last month unveiled a 10.6 per cent leap in membership in its full-year results.

Christie & Co flagged “consistent and impressive” growth across the health and fitness segment, reporting that overall gym membership has risen by 42 per cent since 2010 while the number of gyms has increased by 23 per cent in the same period.

Key growth has been driven by the budget operators, as well as expansion in the franchise market from the likes of Anytime Fitness and Energie Fitness.

Christie & Co’s Alternatives Investment Index found the average yield on prime investments across UK alternative properties as a whole ranged from 3.5 per cent to 7.5 per cent in the first half of 2019.

The health and fitness sector demonstrated significantly higher yields of 4.5 per cent to 5.8 per cent for prime and 6.5 per cent to 8.2 per cent for secondary investments in the opening six months.

The property specialist said that relatively low barriers to entry and growing consumer demand make the health and fitness market “one of the most attractive leisure segments”.

It also highlighted “a breadth of opportunity” for investors and operators, with just 25 per cent of health clubs owned by the top ten operators.

Jon Patrick, head of leisure and development at Christie & Co, said: “We’re continuing to see an attractive mix of quality occupier opportunities coming to market offering long income potential for investors.

“A key consideration for investors however is an understanding of the nuances of the operational real estate they are looking to acquire and how secure their investment may be.”

Research released last week by Savills reported that Scotland is on track for a record year of inward investment into the commercial property market, which traditionally includes the office, industrial and retail sectors.

International funds made up almost half of all purchase value in the opening six months of the year, totalling £575 million and representing the largest share of inward capital since 2016.

Savills forecast a record full-year result and attributed the bumper figures to a strong economic performance and “more attractive” yields of Scottish property compared with other UK regions.

Asian investors made up the largest share, investing £240m, while European capital accounted for almost £200m.