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MarketBeat Nursing Homes in Europe 2024

Analysis conducted in 14 countries: structuring of operators, volumes and dynamics of the investment market and prime yields.

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What is the context in Europe for the Healthcare Real Estate market?

Although the nursing homes asset class demonstrated a seemingly resilience at the end of 2022 with several transactions initiated upstream, the rise of interest rates has led to an overall significant slowdown in investment volumes in Europe.

As a result, the transaction volume for nursing homes assets in Europe over the year 2023 amounted to just over 4 billion EUR, representing a 35% decrease compared to the previous year and a 50% decrease compared to the record year of 2021.

This collapse in volumes is due to the continued wait-and-see-attitude of investors and to the gap between the price expectations of sellers and potential buyers. On the operator side, rising costs driven by inflation have put further pressure on margins and some insolvency risks have been recorded in several European countries.

Many players - both operators and investors - have reviewed their expansion plans in relation to the economic situation and the market uncertainties.

Prime yields of nursing homes properties have been subject to decompression in 2023 with a rise of from 50 bps to 100 bps with differences in magnitude between countries

Transaction yields below 5.00% remain extremely rare, setting the prime yield in Q1 2024 above 5.00% in many markets in Europe.


What is the outlook for the nursing home Real Estate market in 2024?

Following the repricing that occurred in 2023, the market could become dynamic again in 2024. A decrease of key ECB interest rates would be a positive outlook for a recovery in investment activity in the second half of 2024 and could lead to a stabilization of the market, especially with regards to costs of equity and debt, inflation and performance of the operators. 

Nursing care is one of the most relevant growing markets and can be seen as absolutely essential social infrastructure and the backbone of each economy in Europe.

Finally, ESG will continue to be taken into account by players in the healthcare market, whether operators or investors, and ESG criteria will be key factors in their decision-making in 2024.

Nursing Homes Nursing Homes

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