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Demand drivers across Europe’s largest healthcare markets underpinned by diverging trends

Fifty-two percent of French people rely primarily on themselves for their long-term care arrangements, well above the proportion of Germans (26%), Italians (29%) and Spaniards (21%), according to a survey commissioned by Primonial, the French partner of AviaRent Invest AG. The same applies to Italians (35%), although 28% say they will rely on their children to assist them as they get older. In southern Europe, inter-generational solidarity appears to be more prominent than in the north.

Primonial surveyed around 4,000 European seniors in the four most populous euro zone countries: Germany, France, Spain and Italy.

Mathias Giebken, CEO and founder of AviaRent Invest AG, explains:

“The disparity in family solidarity in Europe seems to be directly related to the comparatively much higher levels of investment in northern Europe. Germany and France invested EUR 1.5 billion, three times as much as Italy and Spain in 2017. The study also concludes that Germany and France are the most attractive countries for investments in healthcare real estate because of their high purchasing power and demographic potential.”

While the markets in Germany and France have the most attractive risk-return ratios, Spain and northern Italy are more balanced markets in terms of longer-term investment opportunities and demand. At the same time, the 6% prime yields on investments in these southern European countries in 2017 were higher than the 5.0% to 5.5% yields in Germany and the 4.2% to 5.25% available in France.

Giebken added:

“By 2050 the proportion of the population over the age of 80 in Europe will more than double as the generation of baby boomers ages. Given the fact that there is already very strong demand for care facilities, we are facing an acute housing problem across the whole of Europe. In Germany alone, around 80 billion will have to be invested in new and modernised care facilities over the next 10 years. In future, investors should increasingly develop partnerships with international players who focus on urbanised and qualitative locations with high purchasing power and strong demographic potential.”

The study by BVA Opinion also concludes that there is an investment potential of several billion euros in healthcare real estate to redress the existing undersupply of nursing places. Due to the massive effects of demographic change, public health care funds will be limited by budget constraints, especially in Europe, and the private sector will play an increasingly important role.

Giebken added:

“The decisive criterion is the choice of location. Proximity to city centres or to larger metropolitan areas should be ensured in order to guarantee high market liquidity. We also invest in rural regions, but only where our intensive location analyses have registered net population growth. We are certainly seeing growing interest in larger-scale developments and our Assisted Living Plus product line, which creates senior residences with a neighbourhood character. Demand is growing for small residential parks, communities with day-care centres, shared canteens and outpatient care. We are seeing a real shift away from pure care facilities towards new forms of living.”

james.wallace@realassetmedia.com