MARKETBEAT Overview of the European Nursing Homes Market - EUROPEAN NURSING HOMES REPORT - SilverEco
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MARKETBEAT EUROPEAN NURSING HOMES REPORT Overview of the European Nursing Homes Market 2020 Summary & 2021 Outlook MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & Wakefield
EUROPEAN CONTEXT
DEMOGRAPHIC EVOLUTION
POPULATION OVER 80
POPULATION OVER 80 YEARS IN 2018 IN MILLION
5,2
Source : Eurostat
4,0
3,6 Benelux: Belgium, Luxemburg and the Netherlands
3,3
2,7 CEE: Czechia, Hungary, Poland, Romania and Slovakia
Nordics: Denmark, Finland, Norway and Sweden
1,3 1,4
Southern Europe: Italy, Portugal and Spain
Nordics Benelux CEE United Southern France Germany
Kingdom Europe
The European Union (28 countries ) i n 2018 counts for more than 25 In a recent report “Ageing Europe - looking a t the li ves of older
million people over 80 yea rs , up by 25% over the last decade. This people in the EU”, an anal ysis of the ol der popula tions ' life
older population is predominantl y in Germany (5.1 million people loca tion indi cated that in 2018, 42% of people over 65 were li ving
over 80 yea rs), France (4 million), i n the Southern pa rt of the region in predominantl y urban regions and 38% in intermediate regions ,
(3.6 million) and the Uni ted Kingdom (3.3 million). Combined, these lea ving 20% in predominantl y rural regions. This pa ttern is a
countries a ccount for 56% of the over 80 yea rs population in Europe. hi gher-than-a vera ge proportion of older people li vi ng in rural
Two thi rds of this population is composed by females wi th the ra tio of regions – could be observed in the vas t ma jori ty of the region
the total popula tion va ryi ng between 60% and 70% depending on wi th onl y exceptions for Bel gium a nd Poland. By contras t, the
countries. The pa ce of growth of this popula tion is fas ter than other sha re of ol der people li ving in rural regions was hi gh in France,
age groups . Between 2018 and 2050, the elderl y population i n the Uni ted Ki ngdom, the Netherlands and particularly i n Spain.
European Union is projected to more than double, up by 130%.
DEPENDENCY RATIO
DEPENDENCY RATIO (in %)
75
65
55
Source : Eurostat
45
Dependency ratio = the number of people aged over 65 / the
35 population aged 15-64
25
2018 2020 2030 2040 2050
European Union Benelux CEE
Nordics Southern Europe France
▪ A 2nd group whi ch includes Fra nce, CEE and Germany wi th
Germany United Kingdom
dependency ra tio expected to reach 47%-51% by 2050.
The dependency ra tio (the number of people aged over 65/ the ▪ A thi rd one whi ch includes Southern Europe (Ital y, Spain and
popula tion aged 15-64) in the European Union was at 30.5% in Portugal) where dependency ra tio is expected to be
2018. It is forecasted to increase to 40.8% by 2030 and 57.5% by signi fi cantl y hi gher than the European a vera ge, wi th an
2050. The pace of this increase will be signifi cantl y different es timated ra tio of 63%.
depending on the country and we can identify 3 groups wi thin
the regi on:
▪ A 1st group whi ch includes Benelux, Nordi cs and the Uni ted
Kingdom where the dependency ra tio is expected to rea ch
39%-41% by 2050, fa r bel ow the European a verage.
2
MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & Wakefield
EUROPEAN CONTEXT
NURSING HOME LANDSCAPE
EQUIPMENT RATE
NUMBER OF NURSING HOME BEDS* AND EQUIPMENT RATE IN 2020
The equipment ra te represents the number of beds / 80 plus
popula tion. Across Europe, this ra te va ries very widel y from 6% in
1,200 25%
Poland (the lowest rate) to 23% i n Bel gium (the hi ghes t one) wi th the
European a vera ge standing at 16%. The la ck of nursing homes is qui te 1,000 20%
visible in some countries such as Ital y, Czech Republi c and Poland. In
some of them, tradi tional famil y s tructures coul d s till prevail as a 800
15%
solution for older people li vi ng for a while; however, we can expect in 600
the medium/long term a growi ng demand both from opera tors and 10%
investors, in order to provide alternati ve sol utions for this ageing 400
population. 5%
200
0 0%
AT DE
UK ES
FR NL
SE PT
CH IE
FI CZ
IT PL
SLO
TYPE OF OPERATORS
BE
Nursing homes mana gement can be split between different types of #Beds Equipament Rate
operators: publi c, non-profi t or pri va te ones. The sha re of those
operators in the local ma rkets often depends on regula tions (licensed
BEDS MANAGED BY PRIVATE OPERATORS
operators , outsourced or free ma rket). At the European level , the
ma rket share of ca re homes managed by pri va te opera tors rea ches
31% of total beds (+300 bps in 2 yea rs ). Across the region, the United
90%
Kingdom has a specifi c positi on wi th pri va te opera tors managing 81%
80%
of total beds dedi cated to ageing popula tion. This is by fa r the hi ghes t
70%
ra tio in Europe, wi th Germany following qui te fa r a t 45%. Pri va te
60%
operators can find some space to grow thei r business in a wide range
50%
of countries such as Czech Republi c, Poland, The Netherlands for the
40%
mos t obvious ones and then extend to Sweden, Ital y, France and
30%
Portuga l.
20%
Supported in thei r devel opment by sha rehol ders and corpora te 10%
investment funds but li mited by thei r growth in thei r domes ti c 0%
ma rket, ma jor healthcare providers ha ve al ready sta rted exporting
AT
SE
IT
PT
BE
DE
IE
EUROPE
SLO
CZ
ES
FR
CH
FI
UK
NL
PL
thei r expertise abroad. Over the las t 20 yea rs , ORPEA is becoming the
leader of the ca re homes indus try wi th homes i n 22 countries and 67%
of its networks currentl y outside of France (Europe mainl y but also
Bra zil , China , Colombia, Chile, Mexi co and Urugua y). On i ts end, Source : ORPEA, National Statistics, Cushman & Wakefield
DOMUS VI has accelera ted i ts devel opment in Southern Europe (Spain
and Portugal) but also in Southern Ameri ca (Chili, Urugua y and
Col ombia). Most of the interna tional expansion of heal thca re
operators is made by the a cquisitions of l ocal pri va te operators in
order to get a rapidl y cri tical mass. They can also crea te joint-ventures
in order to increase thei r wei ght; this has been the case i n 2019 for The M&A operators activity to grow their
COLISEE (France) and ARMONEA (Bel gium) or for KORIAN (France) platforms in Europe remained strong in 2020.
buying STEPPING STONES, a Dutch opera tor. Beyond the European
The deals often involve a real estate investor
ma rket, some opera tors ha ve already s tarted to develop thei r
business in Asia – wi th China being a t the top of thei r priori ties – and from the early stages of the process to execute
i n South America. more efficiently the transactions. Investors
having an existing close relationship with
operators can then better leverage their
existing presence; this makes it harder for new
entrants to close such deals
3
MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & WakefieldEUROPEAN CONTEXT
INVESTMENT MARKET
MARKET TRENDS
The pandemi c crisis of Covi d 19 has not slowdown the pace of INVESTMENT VOLUME IN CARE HOMES IN EUROPE, €,
investment acti vi ty in ca re homes a cross Europe. The volume of MILLION
transacti ons recorded in 2020 has increased to rea ch a record level of
€7.6 billion, up by 24% yea r-on-yea r. After several months of 8,000
questioning in the ea rl y sta ge of the crisis about thei r potential
obsolescence and capa ci ty to survi ve to the very s tri ct sana tory rules , 7,000
ca re homes assets ha ve rapidl y demons tra ted thei r resilience in a
6,000
quite challenging ti mes for the commercial real es tate ma rket. Fi rs t,
the ca re homes operators ha ve overall gone through the crisis in a 5,000
pretty good shape, consolidating thei r posi tion and the releva nce of
thei r business models . Secondl y, the fast closing of ca re homes 4,000
a cquisi tions by i nves tors in Q2 and Q3 2020 ha ve re-assured the 3,000
ma rket pla yers in the bri ght future of this asset class and brought
some cla ri ty rega rding the current pri ces . Ca re homes are s till highl y 2,000
sought after by inves tors in Europe wi th Germany confi rming i ts 1,000
leading role wi thin the region wi th more than €3 billion of
transacti ons recorded in 2020 (42% of total volume). The Netherlands -
and the Uni ted Ki ngdom ha ve also pos ted a qui te good ma rket 2015 2016 2017 2018 2019 2020
performance wi th €1 billion and €800 million of transa ctions Source : Cushman & Wakefield
respecti vel y in 2020. Ma rket a cti vi ty has conti nued to be dynami c in
the Northern part of the region with Sweden and Finland totalling a
volume close to €1.6 billion while the Southern countries (mainl y
Spain and Ital y) ha ve benefi tted from a regain of interest from
investors keen to i ncrease thei r i nves tment return rati o. French INVESTMENT VOLUME IN CARE HOMES IN EUROPE IN 2019 & 2020,
investors such as ICADE or PRIMONIAL / PRIMOVIE or some Bel gian € BN
ones such as COFINIMMO ha ve been qui te a cti ve i n 2020 on the buy
side in these two countries, bringing the inves tment volume to €843 0 1000 2000 3000 4000
million, up from €510 million recorded a yea r ago. Fi nally, the French Germany
ma rket is s till suffering from a lack of ca re homes opportuni ties ,
cons training the i nvestment volume to €210 mi llion i n 2020. Sweden & Finland
United Kingdom
The Netherlands
The ca re homes inves tment ma rket should continue to grow over the
next few yea rs , based on fa vorable demographic fundamentals Spain & Italy
coupled wi th a desi re for development from ca re homes opera tors Belgium
who a re increasingl y pa rtnering wi th inves tors for the real es ta te
France
component. In this context, we should see the volume of i nves tment
continuing to grow, with the Southern and Central European ma rkets Other
ga i ning i n share.
Source : Cushman & Wakefield
4
MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & WakefieldEUROPEAN CONTEXT
INVESTMENT MARKET
PRIME YIELDS PRIME YIELDS IN THE HEALTHCARE SECTOR IN EUROPE
Pri me yields for ca re homes in Europe ha ve not changed in 2020; they
6.00%
a re s till ranging from 3.50% in the Uni ted Kingdom followed by
Sweden (3.75%). Fra nce and Germany still occupy an intermedia te 5.00%
position in the Europe landscape wi th hi ghes t pri me yields s tandi ng a t 4.00%
5.25% i n Italy a nd 5.40% i n Poland.
3.00%
Compari ng these yields from a country to another one a cross Europe
is s till a challenging exercise as major di fferences exis t regarding the 2.00%
lease durati on, the type of lease (double or tri ple net) and the rents 1.00%
i ndexation.
0.00%
BELGIUM
GERMANY
FRANCE
ITALY
SWEDEN
SPAIN
THE NETHERLANDS
UK
FINLAND
Source : Cushman & Wakefield
5
MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & Wakefield6 MarketBeat Retirement Homes in Europe - 2020 & Outlook 2021 Cushman & Wakefield
CONTACTS
EMEA retirement home Jérôme Salomon
report coordination Partner jerome.salomon@cushwake.com
Valuation team Capital Markets team
Emeri c Inghels Mi cha el Despiegelaere
Belgium Pa rtner - Va luation CMG Bel gium
emeri c.inghels@cushwake.com mi chael.despiegelaere@cushwake.com
Da vi d Nath Frederic Le Fichoux
Czech Republic Hos pitality CEE CMG Hos pitality CEE
da vi d.nath@cushwake.com frederic.lefichoux@cushwake.com
Juha Mä ki-Lohiluoma Vi l le Suhonen
Finland Hea d of Valuation Finland Ca pi tal Markets Finland
juha .maki-lohiluoma@cushwake.fi vi l l e.suhonen@cushwake.com
Jérôme Salomon Chrys tèl e Villotte
France Pa rtner – Va luation Hea d of Residential and Healthcare France
jerome.salomon@cushwake.com chrys tele.vi llotte@cushwake.com
Ti no Müller Ja n-Bastian Knod
Germany As s ociate Hea d of Healthcare Advisory Germany
ti no.mueller@cushwake.com ja n-bastian.knod@cushwake.com
Dermot Hugues Kevi n Donohue
Ireland As s ociate Valuation Hea d of CMG Ireland
dermot.hugues@cushwake.com kevi n.donohue@cushwake.com
Da ri o Leone Ca rl o Vanini
Italy Pa rtner | Head of Hospitality Italy Hea d of Ca pital Ma rkets Italy
da ri o.leone@cushwake.com ca rl o.vanini@cushwake.com
Ma rk Freeman Mi ra Ka ntor-Pikus
Poland Hea d of Valuation & Advisory Poland Equi ty, Debt & Al ternative Investments
ma rk.freeman@cushwake.com mi ra .kantor@cushwake.com
Ri ca rdo Reis Ana Gomes
Portugal Hea d of Valuation & Advisory Portugal Hea d of Development & Li vi ng Portugal
ri ca rdo.reis@cushwake.com a na .gomes@cushwake.com
Al exa ndra Avdonina
Al a n Baloev
Russia Di rector Valuation
Hea d of CMG Russia alan.Baloev@cushwake.com
a l exandra.avdonina@cushwake.com
Edua rdo Díaz Rupert Lea
Spain Seni or Valuer Healthcare Pa rtner
eduardo.diaz@cushwake.com rupert.l ea@cushwake.com
Anders El vinsson Kri s toffer Sandberg
Sweden Hea d of Valuation & Advisory, Sweden Hea d of Ca pital Ma rkets Sweden
a nders.Elvinsson@cushwake.com kri s toffer.sandberg@cushwake.com
Bertra nd Maag La urent Graziano
Switzerland Hea d of Valuation Hea d of Investment
bertra nd.maag@spgi.ch l gr@s pgi.ch
F.J.J. Pouwelse Ma thi js Flierman
The Netherlands Seni or Valuer Hea d of Ca pital Ma rkets Netherlands
fa bian.Pouwelse@cushwake.com ma thijs.flierman@cushwake.com
Ma rtin Robb Ja mes Hanson
United-Kingdom Hea d of Al ternatives & Specialist Ma rkets Hea lthcare UK
ma rti n.robb@cushwake.com ja mes.hanson@cushwake.com
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