Frankfurt, July 8, 2024 – Cushman & Wakefield, one of the world’s largest real estate consultancies, recorded sales of over EUR 120 million on the German healthcare real estate market in Q2/2024 (Q2/2023: approx. EUR 325 million; -63 percent). This means that the transaction volume in the first half of 2024 was significantly lower than in previous years.
- Transaction volume of only around EUR 250 million in the first half of 2024
- Down 62 per cent compared to the same period last year
- Prime yields for care homes remain at 5.10 per cent and for assisted living at 4.50 per cent
- Operator market on the move and characterized by takeovers
- Institutional capital sources increasingly see opportunities for sustainable investments
Transaction volume remains at an extremely low level
The second quarter of 2024 was the weakest second quarter in terms of turnover in the past five years. With a transaction volume of around EUR 54 million, the Nursing Homes segment generated the majority of the total transaction volume, closely followed by the Assisted Living segment with around EUR 38 million. The outpatient medical care and inpatient medical care segments each contributed only a minor share.
Prime yields remain stable
The prime yield for nursing homes in Germany remained unchanged at 5.10 per cent in the second quarter of 2024. There was also no movement for senior residences for assisted living and the value was 4.50 per cent, as in the previous quarter. The prime yield for outpatient medical care facilities stood at 4.75 per cent and for inpatient medical care facilities (clinics) at 5.75 per cent.
Operator market still characterized by takeovers
There is still movement in the operator market for inpatient healthcare facilities and outpatient care service providers. Some locations of larger nursing home operators that slipped into insolvency last year, such as Hansa Group, Novent Holding or Curata Care, have been taken over by regional champions, family offices or other competitors and are being continued under new management. This shows a stabilization of the operating companies by professional operators.
Difficult refinancing options in the face of increased care costs have had a negative impact on the profitability and stability of healthcare real estate operators across the board since 2023. These effects can still be seen in the key operating figures. It therefore remains important to obtain a clear picture of the business situation at an operational level in order to achieve the greatest possible security for long-term sustainable investments,
explains Jan-Bastian KnodExternal Link, Head of Healthcare Advisory External Link at Cushman & Wakefield.
German healthcare real estate in the interest of international capital sources
The healthcare real estate asset class continues to be the focus of alternative investment strategies for institutional investors. The yield premium over other real estate asset classes creates attractiveness for national and international sources of capital. The increasing demand for care places and services as well as medical services in Germany offers opportunities to participate in the new real estate cycle in the best possible way. There is a lot of liquidity for investments in the asset classes of assisted living, medical care facilities and rehabilitation clinics
summarizes Jan-Bastian Knod.
External Link.
For 2024 as a whole, Cushman & Wakefield anticipates an increase in the transaction volume compared to 2023.
