BNP Paribas Real Estate publishes market figures for Q2 2025
The transaction volume on the healthcare investment market amounted to € 943 million after the first six months. Although the result is around 18% below the long-term average, the half-year result from the previous year was significantly exceeded by 66%. The nursing homes segment continues to be significantly impacted by the high operator risk and the persistently low level of new construction activity. This is the result of the analysis by BNP Paribas Real Estate.
In the first half of 2025, however, the healthcare investment market can be attested to a certain market recovery, especially compared to the corresponding half-year results of the two previous years, which were particularly weak. However, the noticeable momentum from the first quarter (€580 million) slowed somewhat in terms of volume in the second quarter (€363 million). "However, the result in the first quarter was mainly driven by the sale of P&W's Care & Living portfolio in Hamburg in the three-digit million range. In contrast, more small transactions were registered in the second quarter than in the first quarter," explains Christoph Meszelinsky, Managing Director and Head of Residential Investment at BNP Paribas Real Estate GmbH.
In contrast to the first quarter, no major transactions of more than €100 million were recorded in the second quarter. However, three deals between €50 million and €100 million were concluded. The sale of a senior citizens' residential complex in Erftstadt near Cologne was the largest transaction in the second quarter at €83 million. Taking into account valuation corrections that have largely been completed and the general conditions on the financing side, the prime yield will remain stable at 4.90% in the second half of the year.
Care properties very dominant
At € 660 million, the investment volume of nursing homes is more than twice as high as in the corresponding half-years of the previous two years. At 70%, the market share is also above the long-term average (66%). In absolute terms, the investment volume is also only slightly below the ten-year average (-11% compared to Ø10 years: just under €738 million). The assisted living sub-asset class (€ 150 million) is up 79% compared to the same period last year and 30% compared to the long-term average (Ø10 years: € 115 million).
The distribution of investment transactions by size class shows that the broad segment of larger transactions over €50 million has a cumulative volume of €655 million. This is due in particular to the major deal in the mid three-digit million range in Q1 and some package sales in Q2.
Prospects
In view of the current financing environment, the persistently high construction costs and some operator insolvencies, low new construction activity is currently being recorded. Currently, value-add investors are increasingly examining the feasibility of construction projects in central locations. Nevertheless, the economic implementation of new construction projects remains limited overall.
"The healthcare investment market is considered an attractive investment destination because it is less dependent on the economy compared to the market as a whole and offers stable cash flows. The ageing population in particular is ensuring predictable growth – the need for care facilities is constantly increasing. There are already bottlenecks in outpatient and inpatient capacities, which are likely to worsen further without accelerated expansion. Against the background of the measures currently being planned with regard to the long-term care reform by the new federal government, the framework conditions for investors are also likely to improve in the medium term," predicts Christoph Meszelinsky.
In the first half of the year, there was a significant increase in investor interest on the demand side, especially with regard to investments with high operator quality and larger volumes. At the same time, the risk of operator insolvencies is currently considered by market participants to be a key challenge more than ever.
In view of the stabilised financing conditions at a lower level, valuation adjustments that have already been largely made and a renewed increase in supply, including in the large-volume products segment, an investment volume of around €2bn is expected for 2025. In addition, a sideways movement in yields appears to be the most likely scenario.
