After declines in 2022 and 2023 due to rising interest rates, the transaction volume in the care home sector in continental Europe stood at €2.3 billion in 2024, a further decline compared to the previous year (minus 10%). Supported by record activity in the UK of around EUR 3.7 billion (after just EUR 1.48 billion in the previous year), however, the consolidated investment volume in Europe in 2024 still totalled EUR 6 billion and was therefore around 48% higher than the previous year (EUR 4.05 billion).
Contrary to the downward trend in continental Europe over the year as a whole, some countries have already recorded rising volumes again. After a quieter start to the year, several large-volume portfolio transactions in the second half of the year, including (partial) acquisitions of companies and sale-and-lease-back deals, were responsible for this increase.
EUR 634 million in Germany in 2024 as a whole was equivalent to an increase of 40 per cent compared to the weak result of the previous year. Spain and Italy together accounted for EUR 317 million, also a double-digit increase compared to 2023 (an increase of 20 per cent). France maintained the low level of the previous year at around €200 million.
In contrast, sharp declines were reported from Ireland: €70 million for the year as a whole is equivalent to a seven-year low and a fall of around half compared to the already very weak previous year. Sweden and Finland also suffered declines of a similar magnitude (minus 44 per cent), registering a combined transaction volume of around €507 million in 2024 after €915 million in the previous year, the lowest result in the last nine years.
Acquisitions in 2024 confirmed the new yield environment. Prime yields stabilised at the end of 2024 - after corrections since 2022 with an increase of 100 to 150 basis points and country-specific differences. Transaction yields below 5.00% are no longer observed in most countries, while the prime yield in 2024 in Europe has stabilised between 5.00% and 5.75%.
Although operating performance is improving, some operators are still struggling to raise capital. This situation is likely to create opportunities for sale and leaseback deals for investors.
While some long-standing investors have slowed down their activities, new players have entered the European market or tapped into new national markets in 2024.
Care property investment market in Europe in 2025 with positive prospects - social relevance as a plus point
The investment market will see a noticeable return of liquidity in 2025. While opportunistic and value-add investors have been particularly active in recent years, interest in core and core+ capital is now increasing.
interest in core and core+ capital. Institutional investors are increasingly looking for stable investments with solid cash flows. This is leading to a revitalisation of the market in this segment.
International investors remain a driving force in the care property market. Despite economic uncertainties, Europe remains attractive due to its stable framework conditions and long-term growth opportunities. Capital flows from North America, the Middle East and Asia as well as cross-border European investments are intensifying competition for high-quality sustainable properties, particularly in large metropolitan regions.
"Recent market changes have shown that diversification is a key factor in the resilience of investment portfolios. Investors who have traditionally focussed on other asset classes are increasingly looking for alternatives in areas such as healthcare, housing or infrastructure. This strategy helps to spread risks and ensure stable returns even in volatile times," says Jan-Bastian Knod, Head of Residential Investment Germany and Head of Healthcare Advisory at Cushman & Wakefield. He continues: "Care properties are increasingly becoming the focus of investors: they play an essential role in social infrastructure. Demographic change is driving the rising demand for care facilities and assisted living. This provides a basis for long-term and crisis-resistant earnings opportunities."
Trends on the operator markets
In order to remain competitive, operators are focusing on modernising their care facilities and showing flexibility by offering patients more diverse solutions. In this context, they are increasingly integrating new options such as day care services and small assisted living units.
In Germany, the effects of the new hospital reform and the political will for an urgently needed care reform will be decisive for the future development of the care and healthcare sector.
In addition, operators are facing new challenges, in particular the introduction of technological advances such as digital healthcare solutions and artificial intelligence. However, these new solutions aim to improve the quality of care and operational efficiency, making healthcare property more attractive to investors in the long term.
Investors in the care property market: here to stay
We assume that the large specialised investors will continue to invest in care homes and also increasingly in residential concepts for senior citizens. The investment market for care homes should continue to grow in the coming years, driven by the willingness of operators to expand, who are increasingly entering into profitable partnerships with investors in the property sector.In addition, public-private partnerships (PPPs) will play a decisive role in the further development of new healthcare infrastructures. This co-operation is expected to facilitate the construction of innovative facilities that improve service quality and treatment.
In some countries, such as the UK, investment trends are quite optimistic. After a record year for investment activity in 2024, this momentum is expected to continue. The factors that have driven specialist property-focused and operationally intensive transactions remain largely unchanged. In addition, it goes without saying that high-quality properties in regions with strong demand are a compelling investment opportunity.
There are also signs of an increase in activity in Germany in 2025. At the beginning of the year, Deutsche Wohnen AG sold Pflegen & Wohnen Hamburg GmbH to Hamburgische Gesellschaft für Gesellschaft für Vermögensverwaltung, a subsidiary of the City of Hamburg.
Jan-Bastian Knod: "Overall, transaction processes are still slowing down. Buyers are making stricter demands, particularly with regard to operational criteria and the sustainability of rental yields. Nevertheless, targeted investment in modernisation, energy efficiency and functional improvements will be crucial in Europe in the coming years. For example, the lack of high-quality investment products is currently slowing down market development in Germany. A revitalisation of new construction activity is urgently needed, particularly in view of the increasing demand for care places and senior housing."
