International real estate consultancy firm Cushman & Wakefield recorded a transaction volume of around EUR 2.3 billion in the German healthcare real estate market in 2022 (2021: EUR 3.7 billion). This is 38 percent less than in 2021. The decline in transaction volume compared to the previous year is due to the increased uncertainty in the market, the changed financing environment and a lack of products.
No year-end rally in 2022
With a volume of EUR 699 million, 31 individual-property and portfolio transactions were completed in Q4 2022. In the comparable period of 2021, this figure was EUR 2.0 billion, however the latter reflects the special effect of the takeover of Deutsche Wohnen by Vonovia. In 2022, around 54 percent of the total transaction volume was generated by individual-property transactions.
Regarding portfolio transactions, three major deals accounted for around 20 percent of transaction volume: the purchase of nine ProCurand properties by Primonial REIM, the sale of new senior and care properties by Carestone and the sale of the Futura III Portfolio by Senioren-Wohnen to Primonial REIM. C&W acted as advisor on the latter two deals.
Jan-Bastian Knod, Head of Healthcare & Residential Advisory at C&W, comments: "The German healthcare real estate market continues to exhibit a high degree of crisis resilience. Many non-European capital sources are therefore also seeking investment opportunities here. At the same time, healthcare real estate is an essential component of many German institutional investors’ ESG strategies. We therefore expect high liquidity for such purchases in 2023 as well."
Spread between federal bond and prime yields significantly narrower
The prime yield for nursing homes rose significantly at the end of the year to 4.2 percent (2021: 3.9 percent). This continued the trend of the 3rd quarter, which resulted from the changing financing environment and geopolitical events.
The spread between the prime yield for nursing homes and the 10-year federal bond narrowed significantly in the course of 2022. While it was still at 420 basis points at the beginning of the year, it had narrowed to around 220 basis points by the end of December.
The prime yield in the assisted living segment was between 3.25 and 3.50 percent at the end of 2022 (2021: 3.0 to 3.25 percent). For medical centres and medical care centres, the values ranged between 3.75 percent and 4.2 percent (2021: 3.5 to 4.0 percent).