The nursing home sector in France, and more generally in Europe, plays a key role in the care of people who are losing their autonomy, in a context of accelerated population ageing. In her latest report, Fanny Meindre, PhD, Director Healthcare Research at Natixis CIB, explores the necessary transformation of the sector.
A highly regulated environment
Nursing homes operate in a highly regulated environment, with strict standards to guarantee the quality of care and the safety of residents. While this regulation meets the growing expectations of families in terms of ethics and transparency, it also imposes significant constraints on operators, whether public, private or associative. These constraints add to structural challenges, such as increased operating costs, infrastructure modernization, and a shortage of skilled personnel.
Reinventing to meet growing demand and new expectations
In addition, the sector was confronted with the Orpea crisis which undermined investor confidence in the sector. Nevertheless, it has allowed to question its fundamentals and to initiate a transformation.
The sector also offers opportunities: the growing demand offers significant potential for actors able to innovate and adapt to the new expectations of residents and their families, such as institutions combining nursing homes and home services, as well as opportunities linked to new technologies.
The analysis of the main players in France and the different European regulations allow to identify different development strategies and growth opportunities in the sector.
A bearish phase despite strong sector's fundamentals
The healthcare care home market has entered a bearish phase despite the strong sector's fundamentals in terms of medium and long-term demand. The recovery is expected to occur a little later than that of other commercial real estate sectors due to the imbalance between sellers and buyers, although the decline in interest rates and the relatively high level of cap rate from care homes remain short-term supportive factors.
