• Transaction volume of €116 million in the first quarter of 2024, 71 percent less than in the year-earlier period
• Care homes and assisted living remain the dominant asset classes
• Care home prime yield stable at 5.20 percent since year-end 2023
• Signs of a revival over the course of the year – also for alternative usage classes such as outpatient healthcare properties

Germany’s healthcare real estate investment market reported a transaction volume of €116 million in the first quarter of 2024. Compared with the year-earlier period, this marks a decline of 71 percent. International investors captured a share of 17 percent in the market (up two percentage points). The share of portfolio deals also came in at 17 percent (21 percentage points lower). These are the conclusions drawn in a current analysis prepared by the global commercial real estate services company CBRE.

Compared with the first quarter of 2023, this represents an increase in the prime yield of 0.60 percentage points.

The market share of care homes and assisted living stood at 70 percent. These two asset classes that are increasingly acquired in the form of mixed-use properties therefore dominated the healthcare real estate investment market in the first quarter of 2024. Medical centers took second place with 19 percent. Rehab clinics and hospitals contributed 10 percent to the transaction volume.

Outlook for the rest of the year

“We assume that the coming quarters will bring some revival to the healthcare real estate investment market. We are seeing the first signs in an increasing number of inquiries on estimates concerning potential selling processes in all healthcare property segments. Outpatient healthcare properties such as medical centers and medical healthcare centers are enjoying growing popularity with investors. There is no alternative to the healthcare market – the megatrend continues unabated – the market is in the long-awaited recovery phase,” comments Marco Schnell, Senior Director Investment Advisory Services at CBRE.

“Inflation continues to fall in Germany. Accordingly, the country’s inflation rate is likely to be around 2.2 percent in March 2024, marking the lowest level since April 2021. Although we do not expect the European Central Bank to cut interest rates at its upcoming meeting in April, the market is anticipating an initial move in this direction at its meeting next scheduled in June. The still cautious approach adopted by the European Central Bank confirms our opinion that interest rates will not be lowered before the summer. The European Central Bank is still concerned about persistently high inflation. Nevertheless, the new interest rate regime should provide greater planning reliability again when investing in real estate,” Linsin explains.