What is the context in Europe for the Healthcare Real Estate market?
After successive falls in 2022 and 2023 as a result of rising interest rates, investment volume in nursing homes properties in continental Europe reached 2.3 Billion euros in 2024, representing an annual decrease of 10%.
Buoyed by the record level of activity in the UK, with almost 3.7 Billion euros, the consolidated investment volume in Europe reach 6 Billion euros in 2024. While some countries have already seen an increase in 2024, activity was quieter in the first half of the year, with several major transactions recorded in the second half on large portfolios, including WholeCo and sale and lease back deals.
Acquisitions in 2024 have confirmed the new yield environment, with prime yields of nursing home assets appearing to stabilize at the end of 2024 after decompressing since 2022 with a rise of 100 bps to 150 bps and differences in magnitude between countries. Transaction yields below 5.00% are no longer observed in most countries, stabilizing the prime yield in 2024 between 5.00% and 5.75% in Europe.
What is the outlook for the nursing home Real Estate market in 2025?
The investment market in 2025 is experiencing a noticeable return of liquidity. While opportunistic and value-add investors were primarily active in recent years, interest of core+ and core capital is now increasing. Institutional investors are increasingly seeking stable investments with solid cashflows, leading to a revival of the market in this segment. International investors remain a driving force in the nursing real estate market. Despite economic uncertainties, Europe remains attractive due to its stable framework conditions and long-term growth prospects.
Care properties are increasingly coming into focus for investors, as they play an essential role in social infrastructure. Demographic change is driving rising demand for care facilities and assisted living, offering long-term and crisis-resistant earnings opportunities. Institutional investors and specialized funds are expanding their involvement in this segment to benefit from societal developments. Recent market developments have shown that diversification is a key factor in the resilience of investment portfolios. Investors who traditionally focused on other asset classes are increasingly seeking alternatives in areas such as healthcare, living or infrastructure. This strategy helps spread risks and ensures stable returns even in volatile times.
