A shortage of assets in the healthcare market in Germany leads to a decline in the volume of transactions
The decline represents 52% in the first half of 2019 compared to last year
Lack of large-volume deals is the main reason for this figure, according to experts from the brokerage firm CBRE. While many investors are looking to invest in real estate designed for health care, the market is suffering from a shortage of supply.
However, some momentum can be seen beyond the sales of a large portfolios. In those years without large transactions, the current volume of transactions this year would have been the volume of the entire year. The lack of major deals is felt in the proportion of transactions made by international investors, which fell by 31 percentage points to 53%. International investors tend to be more interested in large portfolio transactions.
Yields for nursing homes remain unchanged compared to the first quarter, standing at 4.75%. Thus, yields in the healthcare market are higher than those offered by office real estate, with yields barely exceeding 3%. However, this figure should also decrease in healthcare real estate.
Despite the high demand, especially from international investors, large portfolio transactions are not expected in the second half of 2019. Experts expect the total volume of transactions in this area in Germany to reach around € 1.25-1.5 billion this year.
One company that has invested heavily in the industry is a Belgian healthcare company called REIT Aedifica, which recently signed another € 20 million deal. In addition, the company previously purchased a health care complex in the state of Saxony and built another campus in the town of Schwerin in northern Germany at a cost of 12 million euros.