Market for nursing homes
According to a recent analysis by the international real estate consultancy Savills, investment volumes in the European nursing home market have recovered significantly in the second half of 2024 and in the course of 2025 so far. The drivers of this development are falling interest rates, a convergence of the price expectations of buyers and sellers and improved operating performance of operators.
In the first five months of 2025, around 1.76 billion euros were invested in the European nursing home market – a figure that exceeds the investment volume of the same period in 2021, according to Savills. At that time, the highest annual result of the past decade was achieved. The current figures point to growing investor confidence – favoured by rising care fees, falling financing costs and increasing profitability of operators.
According to the report, Great Britain remains the most attractive care market in Europe. The decisive factors are high pricing power, strong demand in the self-pay segment and extensive portfolios with attractive entry opportunities. US REITs acquire UK REITs at a premium to market value and use so-called WholeCo structures to optimise returns.
In Europe, Spain in particular impresses with a significant supply deficit and low cost per bed – both of which offer investors an attractive price-performance ratio and short-term growth potential. Germany is also regaining investor confidence after a phase of operational market distortions. Despite the considerable challenges of recent years, the German market for healthcare and social real estate again recorded a noticeable transaction volume of just under EUR 920 million in the first half of 2025 – in particular, the sale of 13 Hamburg nursing homes by Deutsche Wohnen to the municipal investment company HGV for around EUR 380 million played a role here.
"Demographic change is causing the demand for nursing homes in Germany to continue to rise. By 2070, the number of people in need of care is expected to rise to almost 7 million – at the same time, there is a threat of a shortage of around 2.2 million age-appropriate housing units. Despite the shortage of skilled workers and rising operating costs, the market remains highly attractive: the demand for high-quality care services is increasing, and innovative care concepts are opening up new opportunities in a future-proof and resilient market," emphasizes Max Eiting, Head of Healthcare Germany at Savills Operational Capital Markets.
Thomas Atherton, Strategy and Market Intelligence Manager at Savills Operational Capital Markets, said: "Europe is increasingly becoming the focus of international capital, driven by faster adjustment to macroeconomic conditions, faster price revaluations and an improving fiscal situation compared to the US. A striking example of this trend is Blackstone's record €9.8 billion fund, which was launched exclusively for European real estate in April 2025."
Caryn Donahue, Head of Senior Housing Transactions, Healthcare & Senior Living at Savills OCM, adds: "The positive momentum of the previous year continues in 2025, supported by falling interest rates and a noticeable convergence between buyer and seller price expectations, which were previously distorted by the global expansion phase. The market recovery since the second half of 2024 has been driven in particular by the strong performance in the United Kingdom, Spain, Germany and the Netherlands. Cross-border capital is playing an increasingly central role in this."
In 2024, cross-border investments accounted for 48% of the total volume in the nursing property market. From January to May 2025, their share was as high as 85%. According to the latest Savills European Operational Real Estate (OpRE) Investor Survey 2025, 24% of investors surveyed are planning a pan-European investment strategy in the care real estate sector – a trend that is likely to continue.
Further evidence of the growing market momentum is the merger of Cofinimmo (GAV: €6.0 billion) and Aedifica (GAV: €6.1 billion) announced in June 2025, creating the world's fourth-largest REIT with a focus on healthcare real estate with a combined CLA of €12.1 billion. The new vehicle brings together the two largest European healthcare REITs and expands its geographical presence to the UK, Spain, Finland, Ireland and Italy.
"We continue to observe high liquidity both in the banking sector and in alternative sources of financing – also due to the still low transaction volume. Competition among lenders is correspondingly high, especially in the area of operational real estate segments, which continue to be a top priority for capital providers," comments Charlie Bottomley, Director, Savills Capital Advisors, Debt Advisory, adding: "Non-bank lenders continue to expand their operations in continental Europe, opening up to more complex or transforming assets and adapting their underwriting mandates accordingly. Increasing competition is leading to falling margins, higher loan-to-value ratios and increasingly flexible financing structures – including extended interest-free periods, simplified covenant regulations and individually tailored repayment profiles."
