We are soon to release our 2025 Healthcare Property Report. Last year we released our first Special Report on Europe’s healthcare real estate market. This year’s report is structured similarly to last year’s, covering the latest market developments and deep dives into different sub sectors, but at roughly double the length of last year’s, it is substantially more indepth and features more case study interviews with specialist healthcare real estate investors.
A few key themes stand out from this year’s report.
European REITs are still struggling to raise capital and do acquisitions
European healthcare real estate investors have continued to struggle to make acquisitions throughout 2024 and the start of 2025. Listed REITs in particular have found it difficult to raise both debt and equity finance, and consequently for the most part haven’t been acquiring.
In the UK, US REITs have, to a certain extent, been stepping in to fill the gap. Listed US REITs Welltower and Omega were the most active acquirers of UK healthcare real estate in 2024. In a similar vein, this week we report on the buyout offers for listed UK REITs Assura and Care REIT by US investors KKR (with Stonepeak) and CareTrust.
New build activity is still on hold in most places
New build activity continues to be hampered in most places by high construction and debt costs, both of which shot up in 2022 and have remained elevated since. New builds are most difficult in places where there are strict regulatory limits on operator fees, as this limits rental yields and the incentive to build. Building has been particularly difficult in France and Germany. The UK and Spain are fairing a little better, seeing some new developments in recent months.
Assisted living is still in search of a viable business model
In large part because of the difficulty in building, assisted living (sometimes called retirement living) hasn’t taken off in Europe. Some retirement village developments have even been abandoned half built.
But Europe’s assisted living operators have also struggled to turn a profit with existing retirement villages. The issue, according to many of the investors and advisors we spoke to, is that it is harder to get the business model right for assisted living than it is with nursing homes or domiciliary care.
ESG is as important as ever
European real estate investors appear to be as committed as ever to making their buildings ESG-friendly, regardless of the policy direction across the Atlantic. But it is still sometimes a struggle to get their operator tenants, especially the smaller, less corporate ones, to prioritise it to the same extent as them.