Investing In European Care Home Markets

Abstract

The elderly population in Europe is currently experiencing very rapid growth, with those aged over-65 accounting for 21.3% of the total population as of 2023. This demographic trend is expected to accelerate, with projections indicating that by 2050, nearly a third of the population will be in the elderly age group. This demographic shift will have a great impact on the economy, healthcare, and social welfare systems. As a result, there will be a growing demand for long-term care (LTC) services and nursing homes, attracting diverse strategic investments in the senior care infrastructure across European countries. In 2023, there was a significant decline in market growth for the European investment landscape for care/nursing homes, with investments dropping by 50% and 35% in 2021 and 2022 respectively. This reduction was mainly driven by investor caution in the face of rising inflation and increased operational costs. Nevertheless, the care home sector continues to be an appealing investment option, particularly to buy-to-let investors, due to the steady income and the stability provided by long-term contractual leases and partnerships. This report aims to provide Franklin Templeton a comprehensive analysis of the European care home market, with an emphasis on current market operators providing non-clinical elderly care and nursing care services. The report offers an extensive analysis of the geographical markets, relevant health system information, and profiles of care home operators across 7 European countries, assesses the market’s potential, and identifies major investment opportunities. Key findings of the research indicate that while established markets like France, Germany, and the UK offer stable returns with proven business models, their growth capacity is limited and heavily influenced by political and regulatory landscapes. While growing markets like Spain and Italy offer significant potential due to their rapidly ageing populations and shifting preferences toward elderly care, regional regulations, cultural norms, and financial support structures vary, impacting investment potential. Key challenges include regional disparities in care quality and infrastructure variations. When Franklin Templeton is considering the most attractive market for potential investments, it is crucial to take into consideration not only the short-term financial returns, but also the long- term sustainability of the market.