Investment into senior housing and care homes totalled nearly €1.9 billion in the Nordics (Denmark, Finland, Norway and Sweden) last year, double what was invested in 2019 and 217 per cent above the average level recorded over the past five years, according to RCA data.

Recent deals include Aedifica acquiring Finnish care homes in Espoo, Oulu, Laukaa and Kempele in February 2021 and Northern Horizon Capital buying a newly built nursing home with 70 resident rooms in Frederikssund, Denmark, in September. In October, NREP announced that it had raised €1.9 billion for its Nordic Strategies Fund IV to focus on residential rental properties, care homes and modern logistics.

A key reason for investment is the sector’s stable income stream, which has also been proven during the Covid-19 crisis, with the vast majority of tenants making timely rent payments, or the government subsidising their rent. The income stream is very similar to the student housing sector, however, churn is much lower, with a five to seven-year typical tenancy length.

So why the Nordics? The region is among the most urbanised countries in Europe. This urbanisation has put pressure on the residential market in large cities with limited supply to absorb the growing, and increasingly aging, population concentrated in key Nordic cities.

The residential investment market is already highly institutionalised. Over the past two years, residential investment accounted for 29 per cent of total real estate investment, compared with 16 per cent on average across Europe. International investors are increasingly attracted to the region which has one of the continent’s most affluent populations.

Furthermore, senior living and care home yields are attractive compared with the traditional multifamily sector. At the end of Q4 2020, prime net senior housing yields stood at 3.3 per cent in Helsinki and 4 per cent in Stockholm according to Savills research. For the same countries, prime net care home yields stood at 4.7 per cent and 3.85 per cent, respectively, compared with prime net multifamily yields of 3.25 per cent for Helsinki and 3.5 per cent for Stockholm – providing a healthy yield arbitrage.

Additionally, operators tend to provide leases of 10+ years, allowing investors to plan for the long term. Altiden and Attendo operate assets for NREP in Sweden and Denmark and together with CASA Group, NREP have Plushusene, which is focused on active seniors wanting to live in a community with mixed age groups.   

We anticipate that the Nordics will continue to see significant investment interest into its senior living and care home market as international investors enter the region. We’re seeing both strong demand from developers/operators seeking capital and international capital looking for partnerships. As senior housing gathers momentum across Europe, we expect that investors will look beyond the more established markets of France, Germany and the UK, with Southern and Central and Eastern Europe likely to be the next beneficiaries of this trend following the Nordics. 

Further information

Contact Christiane Halbesma or Aurelio Di Napoli

Contact Savills Residential Investment & Development