Yield opportunity – for experts, yes.
Around 6 percent yield per year is enticing – especially in a growth market entailing moderate risk. Markus Bienentreu, CEO at TERRANUS, explains what matters nevertheless when buying healthcare properties.
In the meantime, some care home property purchases are recording prices that are 15 times above annual rent. Does that make sense? “Yes – but you have to differentiate clearly,” says Markus Bienentreu, CEO at TERRANUS. A realistic view of a lucrative growth market can be gained at EXPO REAL, the leading sector trade fair where TERRANUS is represented on the conference program.
Entering into risk – and knowing where to
Secure market potential – that is also independent of economic cycles: it’s no wonder that high demand is encountering the problem of ever fewer properties – at ever higher prices. Bienentreu notes: “The drawback is that many investors lack experience in the care segment. They quickly overestimate or underestimate both the opportunities and the risks involved. Only a differentiated analysis leads to successful investment decisions – and you need a lot of expertise to perform such an analysis.”
More expensive, but with a clear yield premium
This is because – despite prices having risen – healthcare and senior housing continues to generate higher yields than classic real estate segments such as office and retail.
Three reasons suggest this situation will continue in the future:
1. Germany is ageing, with strong market growth being as good as guarantee
2. Dynamism derives from demography and is independent of economic cycles
3. Investments in care homes are highly crisis-resistant as a consequence
Local quality decisive
Local expertise is needed to benefit from this potential, however. The reputation a home enjoys, its capacity utilisation, whether it attracts qualified staff, are all factors that are practically always decided locally. Investors should beware of empty promises. “Investors without precise market knowledge who describe a healthcare property purchase as an absolutely secure investment type are not to be taken seriously. The exact opposite is the case in practice – the devil is always in the detail. This is precisely where our expertise comes to bear – in the differentiated analysis of all success factors – thereby providing a solid foundation for all investments.”
Podium discussion at EXPO REAL
In the EXPO REAL conference program, TERRANUS covers just these details and the question “Invest in care?” Carsten Brinkmann, TERRANUS Supervisory Board Chairman, responds to some of these questions:
SPECIAL REAL ESTATE FORUM
Care Real Estate Market Germany
CBRE immoTISS Care Reports 2016
Language of lecture: German
Wednesday 05.10.2016 / 10:00 – 10:50
Hall C2, Stand 040
You can find more figures, data and facts about the healthcare property market in the TERRANUS Care Report on pages 8 and 9, as well as 14 and 15. Here, you can conveniently order the 2016 edition free of charge.