According to research by Cushman & Wakefield (C&W), the transaction volume in the German healthcare real estate market amounted to around EUR 2.0 billion in Q4 2021. This brought the 2021 total for this asset class to around EUR 3.7 billion.
Strong focus on nursing homes and senior residences
Transaction volume in the care sector totalled more than EUR 1.7 billion in the fourth quarter, of which about EUR 1.4 billion went into nursing homes and about EUR 300 million into senior residences providing assisted living. Medical centres and clinics accounted for 14 percent of transaction volume at around EUR 290 million.
Jan-Bastian Knod, Head of Residential Advisory and Healthcare Advisory at C&W:
"In Q4, the prime yield for nursing homes was 3.9 percent and continued to compress, as we expected. The assisted living asset class plays an intermediate role between residential and nursing care. The prime yield here at the end of 2021 was between 3.0 and 3.5 percent - with a further downward trend."
Portfolio sales dominate
At EUR 1.9 billion, portfolio transactions accounted for around 52 percent of market activity, with the care sector making a particularly large transaction volume contribution. With transaction volume of around EUR 2.2 billion in 2021, nursing homes remain the most active asset class in the market. Senior residences with assisted living achieved just under EUR 870 million, an increase of around 62% compared to 2020. Despite the transaction volume here continuing to be limited by the lack of product, this was a new all-time high.
International capital sources showing great interest
In 2021 as a whole, foreign capital sources invested over EUR 1 billion in German healthcare real estate. French institutional healthcare real estate investors were particularly active. The ongoing demographic shift and long-term secure cash flows make the asset class highly attractive to investors.
Jan-Bastian Knod explains: "Investors who have already made acquisitions in the German care market are looking for further opportunities. In addition, new investors from other asset classes are looking for an entry opportunity, with the aim of diversifying their portfolios and participating in this growth sector. The Covid-19-marked years of 2020 and 2021 have highlighted the crisis resilience and relevance of healthcare real estate."
In the current year, C&W expects investor interest to remain high. The ongoing lack of available product, especially existing properties, will lead to further compression in the prime yields for care properties.