European healthcare investment market continues to grow
The European healthcare investment market is seeing continued growth with €9 billion of transactions last year, up 17.4% since 2020, as investors capitalise on the demand for quality healthcare property underpinned by the fundamentals of the elderly care market, according to research from global property advisor Knight Frank.
The investment case for European healthcare property is driven by Europe’s rapidly ageing population with the number of Europeans over the age of 65 projected to grow by 29% by the year 2050, while the over-80s population is set to rise to over 11% from around 6%. This continued ageing of Europe’s demographic is creating significant demand for high-quality, fit for purpose beds across the continent.
The UK, Germany and France represent the key healthcare investment markets in Europe, accounting for around 71% of total transaction volumes, while other markets are continuing to grow. The Nordic countries are continuing to build their presence within European healthcare, with Sweden emerging as one of the top four European countries for investment and Denmark seeing approxomately €122 million of transaction volumes.
There exist a number of submarkets throughout Europe seeing a lack of consolidation providing emerging opportunities for both investors and operators to expand portfolios into other nations on the continent. Furthermore, demographic shifts in smaller emerging Nordic markets such as Iceland and Finland further illustrate the need for quality supply.
Investors are increasingly looking at specific sectors within the European healthcare sector, including specialist care and specialist seniors housing, with £3.2 billion invested in seniors housing and care in Europe in Q4 2021, the highest volumes on record. Knight Frank expects there will be further expansion into these subsectors within the European healthcare market from UK and international investors.
The European healthcare market is led by several key operators including Korian and Orpea. Korian has significant presence in five of the seven regions, consolidating its market dominance following its acquisition of UK provider Berkley Care last year and both Orpea and Korian feature in the top two of six of the key markets, with the exception being the UK.
Julian Evans, head of healthcare at Knight Frank, said: “The coronavirus pandemic unsurprisingly increased awareness of the European healthcare market and the asset classes under that vast umbrella. As demographics continue to shift the demand for quality healthcare shows no sign of subsiding and only strengthen the already growing investment case.
“Investors have helped to address critical funding shortages across the continent and there are further opportunities for portfolio expansion in a number of submarkets which are seeing a lack of consolidation. With extremely positive transaction volumes recorded, we anticipate 2022 will be another strong year, with a mixture of REIT and institutional spending as well as significant cross border capital sitting at the root of this.”
Knight Frank expects that the healthcare property market in 2022 will experience another strong year, following its resilient performance throughout the pandemic and significant investment volumes in the past year. It anticipates that private sector investors in European elderly care are likely to maintain their momentum going forward, expanding in domestic and international markets to satisfy the need for high-quality and future-proof healthcare assets.