• New programme for elderly care: Wozo
  • Elderly people want to move, but there is no suitable supply
  • Waiting lists for people with an admission wish are stable, increasing with an admission need
  • Elderly care performs well financially, but there are increasing concerns
  • Recalibration of NHC and NIC leads to lower rates for care institutions • Number of bankruptcies drops in second quarter
  • Mid-year transaction volume comparable to previous years
  • Initial yields stable

New programme for elderly care: Wozo

The Ministry of Health, Welfare and Sport has introduced a new for care for the elderly: Living, Support and Care for the Elderly, in short Wozo. The care for the elderly has to change. This change is necessary because of the strongly increasing ageing of the population and the related need for care, but also because of the great scarcity of personnel. Wozo elaborates on initiated policy directions aimed at greater independence and longer living at home. Under the motto: "self if possible, home if possible, digital if possible", the focus for the future will lie almost entirely on extramural care. The growth of 'traditional' intramural care will be limited to replacement demand and investments already made.

The question is whether this policy direction is the solution to the problem. There is a great deal of social resistance to the idea that healthcare is becoming more and more impoverished. Yet these measures seem unavoidable and contribute to a solution. This increases the importance of clustered housing for the elderly in the vicinity of care where people can manage by themselves for as long as possible. Minister Helder is raising the envisaged number of new homes where the elderly can receive care from 160,000 to 250,000 in 2030. This is in line with the vision of Zilveren Kruis and Syntrus Achmea that by 2040 450,000 extra homes suitable for the elderly will be needed. For investors in care real estate it is clear that the need and opportunities lie in real estate investments at the interface between living and care. Research shows that there are large differences in need per region.


Source: Ministry of Health, Welfare and Sport

Elderly people want to move, but there is no suitable supply

A survey by Hevo in the Eastern part of North-Brabant, which is representative for a large part of the Netherlands, shows that more than half of the people over 65 live in relatively large houses of more than 120 square metres. As they grow older, their mobility decreases and their need for care increases. Homes are no longer suitable, or are not located in an area where at least two of four essential facilities (supermarket, GP, pharmacy, public transport stop) are available within 500 metres. According to the study, the idea that older people do not want to move is incorrect; most of them do want to move, but the available supply is too limited. Vereniging Eigen Huis conducted research into the housing wishes of people over the age of 55. This showed that a large part of this target group has already thought about their future housing. They do want to move, but there is not enough suitable and affordable housing on offer. The study also showed that the older people get, the greater the need to move from owner-occupied to rented housing. These studies show that new construction can trigger a relocation movement for the elderly.

Waiting lists for people with an admission wish are stable, increasing with an admission need

It is not only people without a need for care who are looking for suitable housing; there are also people waiting for housing for whom the need for care is close at hand. The number of people seeking long-term care at a preferred location, the so-called 'non-active awardees', remained stable in recent months but, at over 16,000, is substantial. The supply is therefore insufficient to meet demand. The number of people in need of admission, however, continues to rise. In one year's time, this waiting list has more than doubled to over 2,500 people. For these people waiting, placement is necessary within a few months.


Source: Zorginstituut Nederland (2022), edited by Syntrus Achmea

Elderly care performs well financially, but there are increasing concerns

An analysis of annual reports of nursing, care and home care institutions by Intrakoop shows that the financial figures for 2021 are positive for most institutions. The government's corona aid certainly contributed to this. With a turnover increase of 3.5 percent, a result of 2.4 percent was achieved, with smaller care institutions doing better financially than larger ones. There are operational concerns because, at 3.7 percent, costs rose faster than turnover. The costs for direct patient care and costs for accommodation and meals remained virtually the same. Costs for maintenance, energy and the hiring of external staff rose by 8 to 9 per cent. Personnel costs constitute three quarters of the total costs. For investors, it is important to invest in accommodation that enables efficient care, whereby accommodation, energy and maintenance costs are as low as possible.

Recalibration of NHC and NIC leads to lower rates for care institutions

In January 2024, the rates for the normative housing costs (NHC) and normative inventory component (NIC) will be reassessed. This has been determined by the Dutch Healthcare Authority in a policy rule. The lower interest rate in recent years lowers the cost of capital, one of the factors in determining the NHC and NIC. Until then, the periodic indexation of 2.5 per cent will still take place. The reassessment does not (yet) take into account changing accommodation requirements or increased building and energy costs. Finance Ideas and AAG estimate the decline in rates for healthcare institutions at 7 to 8 per cent for the NHC and 2.5 per cent for the NIC. For healthcare institutions, this means that, in addition to concerns about rising costs, there will also be a brake on income. This means that financing and property management will be high on the agenda of care institutions in the coming years. It will be increasingly difficult to finance new construction or redevelopment of intramural care properties. Investors must take into account narrower margins between NHC and rent. In cases where the rent is comparable with the NHC, rental risks may arise. Nursing and care homes where people pay the rent themselves and purchase care via a full home package (VPT) will become increasingly popular.


Source: Syntrus Achmea

Number of bankruptcies drops in second quarter

After a relatively strong increase in the first quarter, the number of bankruptcies of health care entities declined strongly again in the second quarter. Especially the number of bankruptcies in Care (care with overnight stay) and Welfare (care without overnight stay) declined strongly. The number of bankruptcies in Cure remained stable. By using a two-quarter moving average, a peak remains visible in the graph. In fact, the number of bankruptcies in the health sector is still very low.


Source: CBS (2022), edited by Syntrus Achmea

Mid-year transaction volume comparable to previous years

After a relatively quiet first quarter compared to last year, the higher transaction volume in the second quarter has lifted the total transaction volume over the first six months. In addition to the volume, the number of transactions also shows a similar trend to last year. Individual transactions strongly determine which type of buyers divide the transaction volume. In the first half of 2022, institutional investors and unlisted property funds in particular were strongly represented. In the first half of 2021, listed property funds were still the largest buyers. A striking feature in the first half of 2022 was the increasing share of Dutch buyers, more sales by housing corporations and fewer sales by care institutions. The share of existing buildings in the transactions remained over 50 percent. Due to the announced increase in transfer tax and rising construction costs, interest in existing property will increase in the second half of 2022.


Source: CBRE (2021), Capital Value (2022), edited by Syntrus Achmea

Initial yields stable

Prime initial yields for healthcare real estate remained predominantly stable in the second quarter. Despite the good investment characteristics for care real estate, uncertainty has crept into the market since the previous quarter due to higher capital market and financing interest rates. High and uncertain construction costs have also made healthcare institutions and investors cautious about new construction projects. Disappointing investment results in asset classes other than property have increased the relative position of property in investment portfolios. As a result, real estate is a victim of its own success, as some institutional investors have overweighted real estate as a result. Positive for the investment portfolio is the partial protection against inflation. A drop in demand for healthcare real estate and thus sharply rising yields are not expected. Healthcare real estate remains attractive as a stable investment with a low risk profile.


Source: Capital Value (2022)


The market for healthcare real estate is facing an increasing number of uncertainties. Healthcare institutions and landlords of housing that is suitable for life expectancy are being restricted in the amount and increase of the rent by government intervention in the NHC and regulation of the housing market (see the Housing chapter). In addition, costs are rising. The demand from users for care real estate remains high and many uncertainties can be anticipated. On the financing and capital market, investors are faced with rising interest rates and uncertainties that reduce the attractiveness of real estate. Ultimately, we do not expect the pressure on investment volumes to ease or for yields to rise sharply. However, the competitive landscape of different investors will change in the coming quarters. This will reduce the pressure on prices or yields.

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