German healthcare investment volumes hit €1bn in H1: C&W

Germany’s healthcare real estate market saw investment transactions worth a total of approximately €1 billion take place in the first half of this year according to Cushman & Wakefield.

The figure was down on the same period last year when assets worth €1.14 billion changed hands, but it was still the second strongest first half in the past ten years, C&W points out.

Part of the Futura portfolio acquired by Primonial.

The second quarter figure, around €430 million, was slightly above the equivalent figure in the previous year. Most of the transaction volume was accounted for by nursing care properties, where deals totalled €357 million.

C&W said that yields are stable and the prime yield for nursing homes was 3.9%, the same as in the first quarter. Yields for assisted living property are between 3% and 3.5% while the prime yield for medical centres and medical care centres is in the range 3.5% to 4%. Yields on clinics and hospitals are about 50 basis points higher.

“Demand for care properties remains high, both among investors already active in the German market and among potential entrants to the market,” said C&W head of healthcare advisory and residential advisory Jan-Bastian Knod.

“The financing environment has changed significantly over recent months. Nevertheless, prime yields remain static for the time being, reaffirming the crisis resilience of healthcare real estate, already proven during the Covid-19 pandemic.”

Jan-Bastian Knod.
About 78% of the transaction volume (€338 million)was accounted for by individual deals although among portfolio transactions, Primonial’s purchase of the seven-asset Futura III portfolio made a significant contribution and C&W said it expects further major portfolio transactions to be completed by the end of the year.

Over 30% of deal volume is accounted for by forward purchases owing the shortage of existing assets in the care sector.

“Higher construction costs, rising interest rates, geopolitical crises and growing inflation rates are causing great uncertainty,” Knod added.

He said that in recent years operators in Europe have become increasingly professionalised and consolidated. Operational platforms have become larger, however, Knod points out that many investors prefer a mix of large, creditworthy operators and small to medium-sized regional companies with expertise in specific markets.

Author: Paul Strohm

Source: Real Asset Insight