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Demographics seal investors into the elderly care market

The European elderly care property investment market remained buoyant, despite Covid-19, with transactions worth €7.2 billion last year, according to research from adviser Knight Frank.

Furthermore, the number of Europeans over the age of 65 is set to grow by 50% within the next 30 years, from 100 million at present to 150 million. This will drive demand for elderly care beds but particularly for full-time nursing care delivered in specialised facilities, KF said in its European Healthcare – Elderly Care Market Research 2021 publication.

Care home ownership by type, public vs private (2015-2020). Source: Knight Frank.

Investors have seized upon this trend to invest a record €8 billion in elderly care and senior living in the four quarters to March 2020.

The firm said that an increasingly wide array of investors is seeking out the opportunities presented by elderly care. Although the market has historically been state-controlled across the continent and thus underfunded, in recent years it has become dominated by private sector ownership which has addressed funding and investment shortages. It has also transformed domestic healthcare markets into pioneering systems, as is the case with the Netherlands’ specialist memory care services.

Investors in European healthcare markets have also become more international. Domestic buyers still lead but overseas buyers have accounted for 43% of European transactions since 2016.

Investors awaken to Southern Europe’s potential

Universal elderly care is a less developed concept in some Southern European countries such as Spain and Italy. However, the over-80 population in Spain is set to double by 2050 and Italy will have the world’s second highest proportion of over-80s (12.8%) by then so international operators and real estate investors are beginning target these markets.

“Undeterred by the pandemic, investors have helped to address critical funding shortages across the continent and have transformed the landscape for European elderly care,” said KF head of healthcare Julian Evans. “An ageing population, the increased globalisation of elderly care and the spotlight shone on the importance of elderly care by the pandemic, have all contributed to an increased appetite for healthcare assets, a trend set to continue going forward.”