Knight Frank: European elderly care investment market remains buoyant
The European elderly care property investment market remained buoyant in 2020 despite the Covid pandemic with €7.2 billion worth of transactions, according to consultancy Knight Frank.
With investors undeterred, care home and senior living transactions represented a higher share of all commercial property deals last year, rising to around three per cent from two per cent in 2019.
Knight Frank said the number of Europeans over the age of 65 is projected to grow by 50 per cent within the next 30 years to 150m.
This is anticipated to drive demand for elderly care beds, particularly for full-time nursing care delivered in specialised facilities.
Investors have seized upon this trend, as well as the increasing consolidation of European markets which has taken place over the last decade, to invest a record €8 billion in elderly care and senior living in the four quarters to March 2020.
Alongside increasing private ownership, the investor profile in pan-European healthcare markets has become more international in recent years.
While domestic buyers still lead the line in countries whose competitive environments favour local players, such as the UK, France and Belgium, overseas buyers have accounted for 43 per cent of European transactions since 2016, spearheaded by specialist listed investors such as the French and Belgian REITs.
The combination of Covid, increasing globalisation and major demographic shifts has highlighted the profound disparity in healthcare investment between European markets.
Germany and the UK, the continent’s largest and most accessible healthcare markets, remain fragmented with the top five operators holding only a 12-13 per cent market share in these countries.
Knight Frank pegs private ownership of elderly care property in the UK at 97 per cent with a market size of 480,000 beds.
The top five operators are HC-One (20,000 beds), Barchester Healthcare (16,000), Four Seasons (9,000), Care UK (9,000), Bupa Care (7,000).
Meanwhile, universal elderly care is a less developed concept in some Southern European countries such as Spain or Italy.
However, with the over-80 population in Spain set to double by 2050 and Italy set to have the world’s second highest proportion of over-80s (12.8 per cent) by the same point, international operators and real estate investors are beginning to cut into these markets.
“Demand for elderly care across Europe has remained high throughout the past few years, driven by demographic shifts and changes to domestic and international markets,” said Knight Frank head of healthcare Julian Evans.
“Undeterred by the pandemic, investors have helped to address critical funding shortages across the continent and have transformed the landscape for European elderly care,” he added.