The European healthcare market continues to attract increased investment volumes, with capital targeting the sector more than doubling since 2015 to €6.5 billion annually, according to a report by global property adviser, Knight Frank.

In the report, European Healthcare: Elderly Care Market 2020, Knight Frank found increased investment appetite for elderly care real estate assets, with investment into care home and senior living assets, having increased to a record-breaking 2.5% of all European commercial property transactions in recent years.

The UK (33%), Germany (25%) and France (10%) have seen the greatest level of real estate investment volumes over the previous five years—owing to significant demand for care homes within these countries and an established healthcare infrastructure. 

Knight Frank said this interest in real estate investment is part of the growing trend towards investors seeking out alternative sectors, which provide long-dated income, to diversify their portfolios. 

European occupancy rates of care homes are the highest of any property class, found Knight Frank, typically close to 90%, which combined with increasing fee rates and an emerging number of efficiently run operators, has attracted further investor interest.

The share of people over the age of 80 is expected to surge over the next 30 years, with one in six adults set to be over 80 by 2050, compared to one in fifteen currently. 

As a result, Knight Frank estimates that the cost of long-term care across Europe will rise to between 3% and 5% of GDP in 2060, up from 1.8% presently. 

Julian Evans, head of healthcare at Knight Frank, said: “Demand for elderly care beds remains robust in Europe, and with the continuing demographics of an ageing European population, there will be unprecedented demand for residential care in decades to come, creating a huge opportunity for those ready to invest.”

He added: “Despite the challenges the sector is facing, the future for care homes is promising. All nations are united by the expectation of rapid elderly population growth over the next few decades and this is opening up huge opportunities in the European private sector. There are certainly lessons to be exchanged with neighbouring countries as care models adapt to cope with future demand.”