The healthcare real estate stock in the Netherlands has grown at its slowest pace ever in the past 10 years. Between 2015 and 2024, the stock increased by only 10% to 51.3 million square meters, a sharp contrast to the previous decade’s average growth of at least 24%. This is according to a recent analysis by Capital Value.
This limited growth over the past decade stands in stark contrast to the rapidly increasing demand for healthcare real estate in the Netherlands in the coming years. Moreover, the quality of the existing stock is insufficient to meet future needs. A significant 58% of the total healthcare real estate stock dates back to before 1995, and over six million square meters has an energy label of E or lower. More investments are urgently needed to expand and improve the quality of healthcare real estate.
Healthcare real estate stock growth lags behind
An analysis of the current stock of Dutch healthcare real estate by construction period reveals that the stock has never expanded so slowly. Over the past 10 years, the stock has increased by only 10% (see figure). While there were periods before 1965 when the stock grew less rapidly, particularly in the immediate aftermath of World War II, the expansion of just 4.5 million square meters over the past decade is alarming, especially considering the current developments in the Netherlands in healthcare demand and the aging population.
Soaring Demand for Healthcare Real Estate
The number of elderly people is rapidly increasing. Although seniors are living longer and healthier lives and remain in their own home longer than ever before, the demand for care from this group is rising sharply. When comparing the growth of the 65+ and 80+ population to the development of the care and cure real estate stock over the same period, it becomes clear that the elderly population is growing faster (and thus, the demand for care as well), while the expansion of the healthcare real estate stock is slowing down. Additionally, the supply of cure real estate has increased faster than the supply of care real estate. Currently, care real estate accounts for approximately 60% of the total healthcare real estate stock.
Six million square meters of Dutch healthcare real estate needs urgent sustainability upgrades
Not only are investments in expanding the stock currently insufficient, but there is also an urgent need for investments in the modernisation and sustainability of the existing healthcare real estate stock. Currently, there is still at least 6 million square meters of healthcare real estate with an energy label of E, F, or G. To upgrade all square meters with an E, F, or G label to an A label, an estimated €3.8 billion is needed. If the square meters with a D label also need to be upgraded to A, the required investment even increases to €5.3 billion.
More capital needed for investments in Dutch healthcare real estate
The current level of investment in healthcare real estate is inadequate. In 2023, just €648 million was invested, and this trend continued into 2024, with less than €400 million invested up to the third quarter. While investors reported having around €4.3 billion in available capital at the end of 2023, this shortfall is hindering the expansion and modernisation of healthcare facilities.
Thijs Konijnendijk, Head of Research at Capital Value: “Based on demographic developments, it is very clear that the demand for care and senior housing will skyrocket in the coming years. Investments in new construction and sustainability upgrades are therefore urgently needed to give the inventory the necessary boost in the coming years. To achieve this, investors will need to broaden their frameworks so that healthcare real estate can be included.”
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