Investment in senior residences and senior living in Europe reached 4 billion euro during this year’s first half, according to Savills Aguirre Newman. This investment volume represents a historical record and a 38% increase over the last five-year average on operations where the buyer’s profile is more diverse and includes investment and pension funds, investment management companies, REITs, financial institutions and developers.
The countries to concentrate more capital were the United Kingdom and Germany. Nevertheless, Spain has quickly become one of the investors’ preferred destinations, along with Italy and Sweden. According to the international real estate consultant, investors’ interest in the senior housing market was generated by the unbalance between offer and demand and the potential the segment represents.
According to Savills Aguirre Newman, senior residences represented more than 76% of all investments within this segment, in Europe, during the last five years, boosted by mergers, acquisitions and large portfolio operations. On the other hand, senior living is an emerging market which usually requires joint ventures and financing deals.
The forecast, due to the large number of operations, long-term projects and the wide variety of new and already existing investments on the market, is for the annual investment in senior residences to reach a new maximum in 2021.
Savills remarked that the growing interest from investors on this segment generated lower yields on prime assets and pointed out that this trend will remain in the coming 12 months. Yields in Europe were set between 3.3% and 6% according to data from the international real estate consultant.
Nuria Béjar, in charge of Healthcare and Senior Living at Savills Aguirre Newman, remarked that «the demographic curve trend, new challenges related to non-dependent senior citizens and the international bet in Spain in this segment led to a very important yield compression, of almost 60 base points, when compared to last year, which will be intensified on projects which are already ongoing».