SHHA: great opportunities in German senior housing market

The German senior housing market offers great opportunities to foreign investors but obstacles in their path must be removed, experts agreed at the SHHA webinar on ‘Senior living & care – is Germany ready for consolidation and international capital?’, which was organised in collaboration with Real Asset Media.

“No one disputes the demographic figures, and everyone can see the huge potential this market offers”, said Yeliz Bicici, COO, Cofinimmo. “We are at a pivotal moment. In order to meet demand, the authorities and private capital must collaborate to improve the system for the residents and to attract investment to the sector which will be good for everyone in Germany.”

The German market has proved to be relatively stable at a time of great instability, with rising interest rates, geopolitical turmoil and financial and economic challenges. but now it needs concerted action in order to grow.

“In the last few years operators really struggled in Germany because Governments were slow to react to their concerns about rising costs”, said Bicici. “Now operators have stabilised their business plans, demand is growing, and it is a time of great opportunities. But private capital cannot save the day on its own.”

There are already signs of growing interest from foreign capital, as the widening gap between demand and supply has been noticed.

“International investors can see that the fundamentals are strong”, said Berthold Becker, Managing Director, TSC Real Estate. “We are seeing a lot of interest and a lot of money coming in from the Middle East and the United States, which is very positive. With more private equity coming in, operators can consolidate and expand again.”

British capital has also been active, as shown by the deal done last year by UK-based Civitas, which acquired a portfolio of senior residences in Germany for €300 million.

“There’s a lot of precedent of overseas funds going into Germany but fragmented regulation is an issue”, said Michael Hodges, Managing Director, Capital Markets, Christie & Co. “In the UK there are four nations, but in Germany there are 16 federal States and 16 different jurisdictions.”

Foreign investors who want to buy a portfolio with assets in different locations need to get to grips with different regulations. Another potential barrier to investment is the lack of transparency of the market compared to countries like the UK.

“More visibility in terms of performance and sustainability of rents is needed, and leases must be improved”, said Hodges. “But if the issues of clarity of regulations and visibility of data are tackled, then confidence in the market will grow. We have seen massive investments in the UK from US companies, and the same could happen to Germany.”