However, for many South African investors seeking a rand hedge, the exchange rate coupled with a relatively inaccessible entry level price proved prohibitive for those seeking a sound medium to long term commercial property investment, says Chris Immelman, MD of Pam Golding Properties International and Projects Division.

Now Pam Golding Properties International has teamed up with Sire Properties, an established UK based private investment company, and identified a unique long term property investment opportunity – via the purchase of existing dental properties. Sire offers investors secure annuity income from commercial real estate in the UK with a specialised focus on the healthcare sector.

Says Immelman: “The lucrative dental sector in the UK offers investors the opportunity to acquire the properties of existing dental practices with secure and attractive income yields - because in most instances a large proportion of dental revenues are underwritten by service contracts between the dentist and the National Health Service. Further enhancing stability of long term revenue is that these contracts are linked to specific properties rather than the registered practitioners, mitigating potential vacancies.

“This makes the investment not only extremely low risk, investors also benefit from long term, fully repairing and insuring commercial leases with 20 year lease periods with fixed – upward only – rent reviews every five years. The advantage of a fully repairing and insuring lease is that the responsibility for repair and maintenance and cost of the building’s insurance lies entirely with the tenant.

“The investment profile from these acquisitions is one of long term income, backed by government National Health Service (NHS) income streams. This means that investors seeking to diversify their property portfolios offshore are able to capitalise on secure rental income in a low risk industry and with the potential for solid capital appreciation,” he says.

Dental ownership deregulation has led to corporate consolidation of the dental operating sector, which in turn has resulted in the creation of a sound commercial property opportunity for investors. As the private equity businesses look to maximise growth through the expansion of their dental operating business they prefer not to hold property on their balance sheets. However, as almost all of these dental properties are converted, former residential properties, many of the selling dentists own the properties and on sale of the practice they wish to sell the property as well.

Immelman says: “The benefits to investors are many, firstly, having a AAA grade UK corporate tenant with 20 year leases in place, with a six to eight percent gross yield and freehold ownership. Furthermore, the entry level price is from just £200 000, with mortgage financing available at a loan to value ratio of approximately 50 to 60 percent. The banks also demonstrate an extremely favourable attitude towards dentistry, due to the tenant’s secure and high level of cash flow.”

Currently, the total dental market in the UK is comprised of over 13 000 practices and taking an estimated, conservative average property value of £300 000, represents a dental property value of £3.9 billion.

Since 1990 the market value of the UK dental market has grown from just over £1 billion to over £5.7 billion in 2013 (Laing Buisson Healthcare Market review 2012-2013) and approximately £6 billion in 2014. Forecasts predict that in 2018 the dental practice sector will be valued at £9 billion.

Adds Immelman: “Dental practices in the UK are typically small to medium sized private businesses that are either owned by an individual, a group of dentists or by a corporate dental group. The largest corporate dental group in the UK and Europe is Integrated dental Holdings, with approximately 600 practices and over 10 million patients.

“Sire provides a fully managed, management process throughout the investment cycle of the property and can also provide expert local assistance in the UK for your chosen exit strategy when you wish to sell the property.”