Europe’s senior living and care homes sector attracted record investment volumes in the first half of 2021. There were deals worth €4 billion across both established and maturing markets in the region during the period according to consultant Savills.
Acquisition figures were 38% above the five-year, first-half average, the firm said. The pool of buyers is also increasing and now includes public and private REITs, equity funds, pension funds, investment managers, financial institutions and developers.
Demand was resilient through the pandemic with deals worth €7.5 billion completed during 2020, just 4% down on 2019 levels.
The UK and Germany accounted for 54% of all deals in the past 12 months but buyers are also looking further afield, Savills said. Sweden, Italy and Spain are all fast becoming destinations for capital allocated to the sector. Each of these markets is taking an increased share of the overall deal volume compared to their five-year averages.
“Investors can see the chronic supply and demand imbalance and the potential for long-term secured rental income streams that these assets provide,” the firm said.
The increase is also driven in part by operating platforms looking for pan-European growth but requiring a capital partner.
Generational shift affecting all countries
Marcus Roberts, head of Europe, operational capital markets at Savills, said the generational shift in Europe, which will mean that by 2050 the over 80s will account for 11% of the population (currently 6%), will affect all countries and continues to put pressure on an already fragmented and non-institutionalised sector.
“The timing of this generational shift is uneven across Europe. The countries likely to be affected first are Italy, Germany and Portugal, but all European countries will eventually see the impact of this trend, leading to increased demand for senior living and care homes.”
Care homes have accounted for 76% of senior housing investments in the past five years, with volumes fuelled by M&A activity and large portfolio deals. Senior living is more of an emerging sector, often developed through forward-funding deals and joint venture partnerships.
However, Caryn Donahue, head of senior housing transactions, operational capital markets at Savills said: “We predict that, based on the large volume of deals and projects currently in the pipeline, with a broad range of new and existing investors, annual investment into the senior housing sector will reach a new high in 2021.”