Large number of investments in Dutch healthcare real estate in Q1 and Q2 2019

9 juli 2019

In the first six months of this year approximately 415 million euros was invested in healthcare real estate, which is a 40% increase compared to the amount of 300 million euros which was invested in the same period last year. These numbers are the result of a survey conducted by Capital Value, who also concluded that the majority of these investments concerned extramural healthcare real estate. It is expected that the number of investments will grow considerably in the second half of this year. Prognoses indicate that the total investment volume in healthcare real estate in 2019 will be over 1 billion euros.

Increasing interest in healthcare real estate
The interest in healthcare real estate has evolved enormously over the last few years. 2017 was a record breaking year with an investment volume of 700 million euros. This trend continued in 2018, when the investment volume reached a total of 945 million euros. Many investors consider healthcare real estate a good alternative to the Dutch residential investment market with its limited supplies and low yields. Healthcare real estate has become a sustainable long-term investment category due the demographic developments and the current healthcare system in The Netherlands. Previous surveys by Capital Value have revealed that investors and housing associations have a joined capital of 1.7 billion euros at their disposal to invest in this segment.

Yields decrease slightly
Initial yields are slightly decreasing. Limited supplies of high quality healthcare real estate and pressure on capital available put returns on sale under pressure. Especially yields on residential care investments are dropping and they are almost at the same level as those on regular residential investments. A great number of new parties have entered the market such as private investors and fund initiators. Additionally, Dutch investors have remarkably increased their share of the total investment volume. Together they were responsible for over 80% of the investment volume in healthcare real estate. While in 2018 international investors were dominant on the market, there were only a few international parties that acquired Dutch healthcare real estate in the first six months of 2019.

Average transaction volume decreased
A relatively large number of transactions in the first six months concerned new-build developments which positively influenced the healthcare real estate stock in The Netherlands. The major part were single asset deals with an average volume of less than 5 million euros, compared to 7 million euros in 2018.

Manon Kuipers, Specialist Healthcare Real Estate at Capital Value: "The number of transactions has fiercely grown, whereas the average transaction volume has decreased. Investors appear to have become more critical about the transaction volume in relation to the capital they have available. Institutional and international investors preferably acquire care complexes or portfolios worth at least 10 million euros. Care complexes that are on the market are usually of less value than that, which offers opportunities for private investors and fund initiators."

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