Major role of Dutch investors
While international investors were cautious in 2023, they showed increased interest in the healthcare real estate market in the first half of 2024. Despite this, Dutch investors accounted for 90% of the transaction volume in the first half of the year. The healthcare real estate market saw a significant focus on private residential care locations, which accounted for 182 million euros (65% of the transaction volume). The sale of the “Wonen bij September” portfolio significantly contributed to this category.
Bouwinvest acquired this portfolio, consisting of 11 residential care locations, from the French publicly traded company Emeis, which has been selling various real estate portfolios to institutional investors for financial reasons in recent years. Additionally, private real estate funds became more active in the healthcare real estate market during this period. A notable example is Capitalisers’ purchase of three locations from Domus Valuas.
More suitable new housing projects needed
The share of new construction in the transaction volume remained at 35% in the first half of the year, representing approximately 400 new rental homes in this segment. In 2023, only 1,700 new rental homes for the elderly were invested in within the healthcare real estate market, whereas the annual national ambition is around 35,000 homes to meet demand. According to CBS, the expected shortage of suitable elderly homes will exceed 300,000 by 2030.
Insufficient new care-appropriate (or age-proof) homes are being developed. Previous research by Capital Value indicates that only 3% of developers’ planned inventory for the coming years is focused on care-appropriate homes. Developers are hesitant to create elderly homes due to the challenges in the new construction sector and often face obstacles due to a lack of knowledge about care-appropriate housing. This is a missed opportunity, as an age-proof elderly home requires only a few adjustments compared to a regular home.
Incentive schemes for market participants
Both politics and market participants must address the shortage of elderly homes with greater urgency. The “Regiewet” could potentially enforce agreements between municipalities, market parties, corporations, and healthcare institutions. The government has already taken steps by providing subsidies, but this is far from sufficient. Market participants should also be able to utilize the Incentive Scheme for Care-Appropriate Homes. This subsidy for housing corporations and healthcare providers is intended to create care-appropriate homes in social housing for people with a care indication who wish to live independently for longer.
Elderly homes outside the scope of impact investing
Dutch and international institutional investors increasingly prioritize impact investments. Significant capital is allocated for affordable housing for specific target groups, including key workers and middle incomes. However, elderly homes often fall outside the impact fund strategies based on target group definitions by various pension funds. Additionally, specific healthcare real estate funds often require 24-hour care, which is not necessary for age-proof homes. Lastly, age-proof homes typically do not fit within regular rental housing funds due to their designation, target group, or the involvement of a healthcare organization. There is a risk that age-proof homes will fall between the cracks, and the stock of this type of elderly housing will not be expanded.
Manon Kuipers, director of Healthcare Real Estate at Capital Value, stated: “It is a positive development that domestic and foreign pension funds make capital available for housing specific target groups through impact funds. Investments in healthcare real estate and elderly homes could ideally fit into the philosophy of such funds. However, in practice, elderly homes often do not find a place within these funds. It is concerning that the strategies of housing funds and specific care funds do not fully align with the need for independent elderly homes. The capital from pension funds and investors is crucial to address the growing shortages. This requires a strategy adjustment so that such homes can be included in multiple funds.”
