New research from Savills has revealed that €515 mln was invested in European senior housing assets in the first half of 2020, an increase of 25% year-on-year.
Over the past five years, investment activity in the sector has been mainly concentrated in France and the UK, together accounting for 68% of the share (38% and 30% respectively), followed by Italy (9%), the Netherlands (7%), Sweden (5%), Germany and Belgium (4% each), according to the international real estate advisor.
Lydia Brissy, director European research at Savills, said: 'During the first half of the year, cross-border capital accounted for 64% of all senior housing investment, a record high in a sector that is traditionally led by domestic investors.
'Cross-border investment still comes predominantly from Europe, notably from France, the UK and Sweden. However, US investors, who have invested heavily in both the student housing and multifamily sectors, are increasingly looking at the potential of senior housing.'
According to Savills, prime senior housing yields currently range between 3.5% and 5% for operating assets, depending on the country, location and quality of the properties. Increased appetite from investors for senior housing has put a downward pressure on prime yields over the past few years.
Yet, on average, the yield discount that senior housing offers over other asset classes ranges between 96bps over prime multifamily and 88bps over prime CBD-offices.
Marcus Roberts, head of Europe, Savills operational capital markets, said: 'The amount of capital targeting senior housing assets has remained relatively unchanged since the beginning of the year and we expect investor interest in the sector to remain solid in the coming months.
'Due to a limited supply of operational assets, changes in regulations and market consolidation due to Covid-19, we expect opportunistic investors to enter the sector and an increasing number of investment deals to be driven by the forward-funding of development opportunities.'
