The fast-ageing population is driving investment in the Spanish nursing and care homes sector.
Oxford Economics estimates that the share of people over 64 years old in Spain will grow to over 25% by 2032 from 20% in 2022, reaching 12 million people.
This growing population has a limited supply of nursing and residential care facilities. In Spain, the number of care home beds per inhabitant is 40% lower than in countries like the Netherlands.
In addition, the country is popular among people who emigrate to the country to retire. It ranks sixth in the 2023 Annual Global Retirement Index and fourth in the Best Countries For Expat Healthcare in 2023, published by the International Living Magazine.
As a result, there is an acute need in Spain for nursing and care, provided for by building new retirement accommodations, which has attracted many international investors over the past few years.
Transaction volumes have been slowing in recent months because of rising financing costs but specialist investors are still expanding their portfolios throughout the country.
In February, Wellder, the Socimi (a type of real estate investment trust) owned by Renta Corporación and the Dutch fund APG, announced the investment of €7.5 million in the acquisition and remodelling of the DomusVi Río Vena nursing home in Burgos. The asset has 98 beds and a surface area of around 4,500 square metres. This is the first investment made by Wellder, which expects to reach a portfolio of elderly-related real estate assets in Spain worth €250 million in an initial phase.
Healthcare Activos, backed by Abu Dhabi sovereign wealth fund ADIA, has announced this year the development of four new care home projects in Spain, two in Catalonia, one in Vitoria and one in Granada. The new projects will be added to the existing pipeline of nine developments. The overall Healthcare Activos portfolio in Spain includes 30 care homes and nine hospitals and clinics.
The Belgium listed healthcare REIT, Aedifica, announced in May it would invest approximately €13 million in the construction of a new care home in Zamora, with delivery scheduled for the fourth quarter of 2024.
The 7,000-square-metre property will have 140 residents, with 108 ensuite bedrooms, and will be managed by Neurocare Home. It will be let on the basis of a new irrevocable 30-year triple net lease. On completion of the works, the initial net rental yield will amount to approximately 5.5%.
Another Belgium REIT, Cofinimmo, said in July it would build a new nursing home in Valladolid with an investment of €14 million. It will have 160 beds in a building of more than 8,000 square metres and be operated by Genesenior. Works should start in mid-July 2023, with completion scheduled for the second quarter of 2025, when the lease will start.
Confinimmo launched its activities in healthcare real estate in Spain in September 2019 and now boasts 24 operating sites and a large pipeline of future projects spread across the country in places like Granada, Galicia and Tenerife.
Spain is set to attract more investment, particularly from specialist healthcare investors, due to the strong underlying demand for care homes, despite the current uncertainty and high interest rates.