Demographic and social change drive investment in Germany
Sylwia Ziemacka, chief operations officer at SHHA, speaks to Nikolai Schmidt, head of healthcare real estate Germany at Swiss Life Asset Managers.
How does Swiss Life’s investment philosophy shape your approach to senior housing and healthcare real estate in Germany?
We have nearly 20 years’ experience investing across Europe in healthcare real estate – nursing care, assisted living, medical centres – and currently hold about €2.7 billion in assets, with €1.7 billion in Germany, one of Europe’s largest markets.
Our focus is stable, long-term returns. Our core mission is “to enable people to lead a self-determined life”. Beyond financial returns, this means building confidence in the future.
Healthcare real estate is central to our strategy, especially given demographic and social changes, so we will continue investing steadily in this sector.
What distinguishes Germany’s healthcare real estate market?
Germany is the largest European market by supply, followed by France. It is often said that the German market is attractive because of its insurance-based financing model. But it is worth acknowledging that only part of nursing care costs is covered by insurance. Residents or social welfare cover the rest, so refinancing is tightly regulated because the state bears cost risk.
Rising costs have strained this system. Some operators faced insolvency, which kicked off market consolidation. Today, many are better refinanced and the market is stabilising. International investors, seeking higher returns and more opportunistic deals than German institutional investors, are selectively entering value-add opportunities, but not yet at scale.
Do you see consolidation creating opportunities for institutional investors, or do you favour long-term partnerships?
Both. Strong asset management is demanded in this environment, accelerating consolidation among operators, investors and asset managers.
We’re more selective in investments and partnerships, with rigorous due diligence, as our investors expect. Our extensive, trusted network of developers and operators built over years is a key advantage. We prefer investing with reliable partners, but remain open to others.
How are you approaching financing amid easing interest rates and returning liquidity?
We aim to finance about 50% of asset value, maintaining roughly a 50% loan-to-value ratio. Interest rates remain high, but acquisition prices have dropped significantly, improving the appeal of debt financing and asset yields. We intend to continue this balanced approach wherever possible.
How do you integrate ESG principles into healthcare real estate, balancing upgrades of existing assets with new sustainable developments?
Our healthcare funds comply with Article 8 of the SFDR, requiring ongoing ESG assessment and optimisation. We prioritise assets with ESG credentials, but focus especially on upgrading existing properties. To lead this, we founded the Climatch, a group of over 40 experts dedicated to ESG implementation – reflecting our long-term sustainability commitment.
What are the biggest challenges for investors in Germany’s senior housing and healthcare market?
The main challenges are the varied regulations across Germany’s 16 federal states, high financing costs Europe-wide, and a shortage of qualified personnel – another Europe-wide problem.
Yet there are opportunities. Operator consolidation and increased professionalism continue. AI in care is growing, freeing nursing staff to focus on face-to-face patient care, which is vital.
Success belongs to those who carefully analyse location, demand and operational factors, and act accordingly. A large, experienced network remains invaluable.
Everyone knows the demand is there and will continue to grow enormously. This is not only because of demographic change, although that remains one of the biggest reasons for its development.
