International real estate consultancy firm Cushman & Wakefield recorded transactions of around EUR 660 million in the German healthcare real estate market in Q3 2022 (Q3 2021: EUR 450 million). This brings the volume for the year thus far to EUR 1.66 billion (Q1-Q3/2021: EUR 1.68 billion). The majority of the transaction volume in the past three months, some EUR 410 million, was again accounted for by nursing care property sales and acquisitions.
Prime yields scarcely changed
The prime yield for nursing homes rose slightly compared to the previous quarter to 4.0 percent (Q2/2022: 3.9%). In the assisted living segment, C&W records values between 3.0 and 3.5 percent, also with a slight upward trend. The prime yield for medical centres and medical care centres continues to range between approximately 3.5 and 4.0 percent, while for clinics and hospitals it is approximately 50 basis points higher.
Jan-Bastian Knod, Head of Healthcare Advisory and Residential Advisory at C&W: "The interest of institutional investors in German healthcare real estate remains high. The structure of the long-term value-secured cash flows and the systemic relevance of healthcare provision in Germany contribute to market stability. The megatrend of demographic change and the increasing demand for health care will continue uninterrupted over the next 10 to 20 years. No major price corrections are expected. Rather, new investors are trying to enter to the German healthcare real estate market."
Portfolio transactions dominate the market
In Q3 2022, portfolio transactions accounted for around 77 percent of total investment volume in the German healthcare real estate market. In particular, the acquisition of nine ProCurand care properties by Primonial, the purchase of five wecare care homes by TSC Real Estate and the sale of three medical care centres by Quadoro contributed significantly to this.
German investors very active
The third quarter saw a particularly high transaction volume in the area of medical centres and medical care centres, at more than EUR 243 million, with the buyers exclusively being domestic investors. In total, more than 60 percent of the capital invested in German health care properties came from Germany.
Building quality focus of investors’ attention
The demand for sustainable healthcare real estate with appropriate building fabric and a high degree of energy efficiency is increasing strongly. For new construction projects, at least the KfW 55 standard is the rule. Existing properties are also assessed in terms of ESG criteria and potential for increasing energy efficiency is identified.
Sustainable construction and building structure go hand in hand with innovative care and living concepts. C&W is certain that the modernization and refurbishment of existing properties in addition to the development of new properties for senior citizens will continue to be necessary in the future, in order to meet the increasing demand for ambulant and inpatient care.