
LightFieldStudios/Envato
Germany’s healthcare real estate market demonstrated resilience in 2024 despite a really tough economic backdrop. A recent roundtable discussion, attended by REFIRE, brought together leading voices from the sector to analyze its current state and identify paths forward. Key themes included stabilizing yields, regulatory hurdles, operator resilience, and untapped opportunities for investment.
The German healthcare real estate market recorded a transaction volume of nearly €1 billion in 2024, a slight decrease from the previous year but a sign of stabilization. "The market’s performance was underpinned by significant deals, particularly Civitas’s acquisition of Katharinenhof, which reshaped the landscape," said Dr. Jan Linsin, head of research at CBRE, referencing the major portfolio transaction.
Assisted living continued to attract investor interest, with net initial yields stabilizing at 4.3% in the premium segment. Meanwhile, nursing care properties, reflecting heightened operator risks and broader interest rate adjustments, recorded yields of 5.4%. However, Linsin noted, "The scarcity of high-quality investable products constrained transaction activity, leaving significant demand unmet."
Operators showing resilience, fewer insolvencies
Operators demonstrated surprising resilience, with fewer insolvencies than anticipated, a development attributed to adjustments in care rates. "The care sector’s stability has surpassed expectations," remarked Berthold Becker, CEO of Berlin-headquartered asset manager TSC Real Estate. "While institutional capital was initially cautious, investor confidence grew as the sector’s fundamentals remained sound."
Still, challenges persist. Becker highlighted the need for greater harmonization across federal states: "We must standardize regulations to streamline construction and operational processes. The current patchwork of rules inflates costs and deters investment."
Looking ahead, the panel forecasted transaction volumes of €1.2 billion to €1.5 billion in 2025, driven by increasing interest in assisted living, rehabilitation clinics, and medical care centres. "Demand for medical care centres is soaring," said Jens Nagel, CEO Germany of the Swedish-owned Hemsö, which specialises in nursing homes and social real estate. "While their investment volumes are smaller, they represent an essential growth area."
New construction, though critical to meeting demand, remains fraught with challenges. "The alignment of construction costs with achievable rents is a significant hurdle," explained Christian Möhrke, CEO of Cureus, one of the largest developers and active managers of in-patient care homes. "Nevertheless, demographic trends underscore the long-term potential of building new facilities."
The discussion emphasized the sector’s reliance on consistent and clear political signals. "Fragmented regulations create uncertainty, which is poison for investors," said Nagel. "Investors need long-term stability to plan effectively."
Calls for deregulation to reduce red tape
The panel also called for deregulation to reduce administrative burdens and cut costs. Möhrke criticized over-regulation, comparing it to forcing ships to run solely on solar power. "The result is a system that’s technically unfeasible and economically unsustainable."
Staffing shortages remain a critical bottleneck for both existing facilities and new developments. "The lack of skilled workers extends project timelines and limits operational efficiency," said Pascal Kleine of Pecuria, a developer of care apartments and sheltered housing. "Reducing administrative burdens and leveraging digital tools could free up staff and resources."
TSC's Becker added, "In some regions, staffing issues are particularly acute, and operators’ ability to attract and retain talent is a key differentiator."
The panel also discussed consolidation among operators. "Consolidation will drive efficiencies, allowing larger operators to better manage resources and respond to market demands," Möhrke noted. Smaller operators, he argued, face growing challenges in accessing institutional capital and maintaining profitability.
Strong fundamentals, but regulatory reform needed
Meanwhile, the investment landscape is shifting. "For institutional investors, this is a unique moment," said Nagel. "Returns are stabilizing, and the market’s fundamentals remain solid. Those willing to invest now will benefit from favourable entry points."
Germany’s healthcare real estate market is both resilient and ripe with opportunity, the panelists suggested. However, achieving its potential depends on targeted reforms and a commitment to long-term stability. The industry’s key stakeholders must address regulatory inefficiencies, provide consistent planning frameworks, and develop innovative investment strategies to tackle the sector’s pressing needs. As Jan Linsin noted, "The fundamentals are strong, but systemic issues must be addressed to unlock the sector’s growth potential."
2025 offers a pivotal moment for transformation, concluded the panelists. Investors, developers, and policymakers can reshape the healthcare property market by focusing on sustainable and scalable solutions that directly address Germany’s demographic demands and operational requirements. With decisive action, the sector can transition from stability to growth, ensuring that healthcare real estate continues to serve as a cornerstone of the German property landscape.