A lot of new capital is seeking to enter the senior accommodation market in Europe but established players have an advantage, delegates heard at Real Asset Media’s Senior Housing & Healthcare Investment briefing, which took place live at MIPIM in Cannes yesterday.
“The market has become very competitive because of new investors that have entered the market during the pandemic”, said Nikolai Schmidt, Managing Director – Transaction Health Care, Swiss Life Asset Managers. “We were pioneers, investing €2 billion in senior homes and assisted living since 2006, but we’re still expanding. It’s a strong market and we like the focus on the social aspect”.
The Covid pandemic has acted as an accelerator, focusing investors’ attention on the importance of the sector and on the opportunities it offers.
“More investors are moving out of offices or resi and trying to get into the healthcare market because they like the long leases and resilient assets”, said Jan-Bastian Knod, Partner, Head of Residential Advisory, Head of Healthcare Advisory, Capital Markets, Cushman & Wakefield. “We see a significant increase in interest and demand and more competition”.
New players tend to target the bigger, established and liquid markets like Germany and France where it is possible to find portfolio deals, while established players are seeking geographical diversification.
“We are pan-European, have €5 billion of assets in 8 countries and are growing our portfolio”, said Raoul Thomassen, Chief Operational Officer, Aedifica. “We have a €800 million pipeline and are ready to enter new markets provided we can buy a portfolio and not just a couple of assets. We’ve just entered Ireland because we see the opportunity to build scale”.
One crucial factor for institutional investors is stability in the country, as they are making long-term commitments and don’t want to have to deal with sudden policy changes. The other is the presence of reliable operators with a good track record.
“France and Germany are the biggest markets, but all countries are under-supplied, so you can find opportunities everywhere provided you have the right product and the right operator”, said Stephen Miles, Executive Director – Head of Operational Real Estate Investment, Continental Europe, CBRE. “Once you have a footprint you can use that expertise to expand”.
Market players with an established footprint have the advantage of expertise and are better placed to find the best operators.
“In Europe, unlike in the US, there aren’t many institutionalised operators, which is a challenge for the sector”, said Caryn Donahue, Head of Senior Housing Transacions, Savills. “That’s the biggest barrier across the Continent”.
Spain and Italy are interesting markets because of the demographics and the shift from family care to professional care in facilities, but there are challenges.
“Southern Europe is lagging behind”, said Dietmar Zischg, partner, CMS Adonnino Ascoli & Cavasola Scamoni. “It’s easier to find product, but it may not be what you’re looking for. You have to choose your operator carefully and do your due diligence because it’s very difficult for the owner to change operator”.