ImmobilienResearch Vornholz
Illustration from ImmobilienResearch Vornholz's publication series on senior housing (Vol. 09)
Germany’s ageing population appears to offer one of property investment’s more dependable demand stories. The number of people aged 67 and over is expected to rise from around 16.7m to 20.9m by the end of the 2030s, while the population aged over 80—the group most likely to require care—is projected to grow by approximately 55% over the longer term.
But ageing does not translate mechanically into demand for conventional care homes. A study by ImmobilienResearch Vornholz, led by our old friend Professor Günter Vornholz, describes senior housing as a collection of submarkets with markedly different residents, operating models and investment risks. Recent transactions illustrate that distinction: institutional capital is targeting modern care properties leased to large operators, while assisted-living schemes and accessible apartments attract investors through different ownership and income structures.
Demography does not dictate the product
Germany had 5.7m people classified as requiring care in 2023, more than twice the number ten years earlier. Yet Vornholz attributes much of that increase not to ageing itself, but to the broader statutory definition of care needs introduced in 2017. Growth is expected to moderate, with the number requiring care projected to reach approximately 6.8m by 2055.
Around 86% of those requiring care are supported at home, while approximately 95% of older people remain in conventional housing. That creates demand extending from adaptations to ordinary homes through accessible apartments and assisted living to residential nursing care.
Yet only 4.4% of Germany’s housing stock met all the criteria for barrier-reduced accommodation in 2022, rising to around 6% among older households.
Improving an existing home can allow its occupant to postpone or avoid moving into specialist accommodation. Senior housing products therefore compete with ordinary residential stock as well as with one another.
Service-oriented senior housing—including supported and assisted-living formats—accounts for only around 2% of the market. Vornholz expects it to grow as older residents seek independence combined with security, community and access to optional support. Traditional care homes, by contrast, are barely expanding, despite the increasing number of older people.
Income and wealth reinforce that segmentation. Vornholz notes that older German households range from couples with an average net monthly income of around €3,759 to single women averaging just €1,858—a disparity reflected in demand ranging from affordable, barrier-free apartments to fee-paying retirement residences. The yield premium reflects the additional complexity: prime yields stand at around 5% for care homes and 4.5% for senior apartments, according to Vornholz, above conventional residential property. But senior housing is “not a sure-fire success”: location, target group and operator structure must all align.
Capital is selecting across the care spectrum
The agreed acquisition of INTEGRA Senioreneinrichtungen shows what institutional capital is seeking at the care-intensive end of the market. Alloheim, Germany’s largest private care-home operator, is acquiring INTEGRA’s operating business, while European Senior Living, an investment platform managed by Elevation Advisors, will acquire the nine properties. Alloheim will lease them under new long-term agreements and retain the INTEGRA brand.
The portfolio comprises 979 care places, including 40 assisted-living apartments, in and around Hamburg, Hanover, Dortmund and Cologne/Bonn. The buildings average 12 years old, 94% of the accommodation is in single rooms and 79% of the properties have energy ratings between EPC A+ and B. The portfolio is also reported to have high occupancy and care quality ratings above the national average.
Elevation called the portfolio a “rare opportunity”, and its characteristics explain why: comparatively young buildings, high occupancy, predominantly single rooms and strong energy performance, combined with an established operator of substantial scale. This is not capital buying demographic demand indiscriminately, but selecting assets that already clear demanding operational and property-quality thresholds.
Alloheim also has numerous facilities in the three federal states involved. It expects the enlarged network to cooperate on staffing and external-service relationships—an important consideration in a sector where demographic change is increasing demand while the available care workforce remains severely constrained.
Pro Urban’s Brina model occupies a different point on the spectrum. Its “Assisted Living Plus” schemes target people aged over 70 who can no longer remain entirely unsupported at home or simply do not wish to live alone.
Residents occupy their own apartments but can add modular services reaching towards nursing-home care. The reported average care grade of 2.5 demonstrates how porous the boundary between assisted living and residential care can become.
The apartments are sold individually to private investors and leased to Brina as operator. Income, vacancies and refurbishment costs are shared through a rental pool rather than attributed to each unit. Pro Urban indicates an initial return of around 3.5–4% once a scheme is fully occupied, although board member Nane Nordsiek acknowledges that the precise return cannot be calculated in advance.
Carestone’s development in Salzgitter applies individual ownership to a more care-intensive product. The facility will provide 110 nursing places sold in separate units to private investors, with Kursana signing a 20-year operating lease. For those owners, Kursana’s covenant and the home’s ability to support its rent are at least as important as the freehold unit. “For a care home, the operator sets the course,” said Carestone development director Ralf Licht.
At the less care-intensive end, the sale of 18 accessible apartments at Bremen’s Kastanienhof resembles conventional residential investment, with optional services but no comparable dependence on a nursing-home operator.
CBRE’s latest lender survey names housing for the elderly among the more popular alternative segments, but finance remains conditional: 57% of lenders would reject properties that neither meet sustainability requirements nor have a credible improvement plan. Modern stock therefore carries an advantage beyond lower energy costs.
REFIRE: Germany plainly needs more housing suited to older people, but demography does not determine which product—or investment—will succeed. The relevant question is which point between independence and residential care a property serves, and whether its affordability, location, building quality and operator can support that role. Senior housing rewards precision, not exposure.