HEALTHCARE

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.

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.

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.

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.