Student housing and healthcare drive European living sector investment in third quarter

London, 30 October 2023 – Investment in student housing and healthcare pushed living transactions to €9bn in Europe in the third quarter of the year, new figures from JLL reveal.

The two emerging sub-sectors accounted for half of investment volumes, with €2.8bn invested in healthcare and €1.7bn in student housing in Q3, reflecting quarter-on-quarter climbs of 59% and 35%, respectively.

The pair were both boosted by several substantial transactions, pushing their share of living investment to the highest on record, rising from 26% in Q2, and 22% for the previous five-year average. That rise occurred as multifamily quarterly investment slowed to €4.5bn, a drop of -46% on Q2.

The largest transaction of the quarter was Primonial REIM’s €1.4bn purchase of a majority stake in Icade Santé and its 159 healthcare assets spanning 2m sqm in France. As a result, living investment in France rose to €2bn, double that of the previous quarter and the same period last year. 

Student housing continued its upward trajectory, bolstered by Cain International’s €582m forward funding investment in two UK regional portfolios with developers Fusion and Olympian Homes. These deals made the UK the largest market for Q3 living investment, accounting for 27% of the total, with France following at 22%.

A drop in multifamily transactions saw Germany slip to third spot, at 17% of living investment. Historically strength in multifamily has seen the country lead volumes, accounting for 31% of living investment in the previous five years. However, high costs and heightened uncertainty around policy and regulation have limited dealmaking, with a notable absence of large deals following a busy Q2.

Overall living investment in Q3 fell 40% on the same period last year. Investment in Q3 brought the year-to-date figure to €29.4bn. The living sectors have accounted for 27% of direct real estate this year, this growing proportion compares to living making up 24% last year and 19% a decade ago.

John Gladstone, Head of Healthcare Capital Markets, EMEA, at JLL, said: “The Icade Sante portfolio that is being retained by Primonial is predominantly what we would define as “Cure” assets, including medicine, surgery and clinics.  This large transaction dominated Q3 2023 volumes, but prime assets in this sub-sector remain highly attractive for investors for their defensive characteristics as critical national infrastructure in the face of long-term trends of ageing and illness.  In Europe, the share of those aged 80 years plus is expected to more than double by 2100, because the number of people of working age is set to shrink while the number of retirees increases.”

Emma Rosser, Director for Living Research, EMEA, at JLL, said: “Recent strength in these higher-yielding sub-sectors has meant that while investment is still down year-on-year, those falls are becoming shallower. 

“Further repricing during the quarter across all living sectors should give investors greater certainty and motivation going into Q4. The fundamentals are stronger than ever and we are already seeing various large deals completed or underway.”

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