The huge appetite for elderly care real estate has seen investment in the sector across the European healthcare market double since 2015 to €6.5bn annually.
The UK (33%), Germany (25%) and France (10%) have seen the greatest level of real estate investment volumes over the previous five years.
Global property adviser Knight Frank’s ‘European Healthcare: Elderly Care Market 2020’ report claims investment into care home and senior living assets have increased to a record-breaking 2.5% of all European commercial property transactions in recent years.
Julian Evans, head of healthcare at Knight Frank, says investors want to diversify and are seeking out alternative sectors that provide incomes over the long-term. In many European countries care homes are largely under private sector ownership and represent an accessible market segment.
“Demand for elderly care beds remains robust in Europe, and with the continuing demographics of an ageing European population, there will be unprecedented demand for residential care in decades to come, creating a huge opportunity for those ready to invest,” says Evans
The reports says European occupancy rates of care homes are the highest of any property class, typically close to 90%. This, combined with increasing fee rates and an emerging number of efficiently run operators, has attracted further investor interest, particularly considering downward pressure on yields in key European countries.
“Despite the challenges the sector is facing, the future for care homes is promising,” says Evans. “All nations are united by the expectation of rapid elderly population growth over the next few decades and this is opening up huge opportunities in the European private sector. There are certainly lessons to be exchanged with neighbouring countries as care models adapt to cope with future demand.”