What are nursing homes?

Why invest in nursing homes?

Why invest in nursing homes?

Demographic trends in Germany clearly demonstrate that we are getting older! Life expectancy in Germany will rise to an average of 87 years by 2060. This represents an increase of 30 percent over the last century.

As society ages, more and more people in Germany are in need of care. In December 1999, there were 2.02 million people in need of care. By December 2009, this number had risen to 2.34 million. By December 2019, 4.13 million people were in need of care as defined by the Long-Term Care Insurance Act (SGB XI). By December 2021, the number had risen to 4.96 million.

This, of course, also means that the need for inpatient care facilities is constantly increasing. We are already facing the challenge that the demand for care places can no longer be met. The gap between the need for care and the available supply of care facilities is already uneven and will continue to diverge in the coming years. Studies show that approximately 300,000 care places will be needed by 2030. This situation will be exacerbated by the fact that many aging care facilities no longer meet today's standards and urgently need to be replaced with new facilities. Conclusion: It is therefore expected that there will be a significant shortage of care properties in the coming years. This fact makes an investment in a care property largely independent of the economic situation and a particularly secure and stable investment.

The concept of care properties

A care facility with, for example, 80–120 care apartments is planned by a property developer or project developer and built in collaboration with the future operator. Individual units are divided and sold to investors as part-ownership, in accordance with the German Condominium Act (WEG). Upon payment of the purchase price and registration in the land register, the investor becomes the owner of the care property and can resell, gift, or bequeath it at any time, as they wish. The lease, usually for a term of at least 20 years plus an extension option, is signed by the operator as the general tenant of the care facility. During the term of the lease, the operator and the facility manager are responsible for all administrative tasks, such as preparing utility bills, commissioning necessary repairs, and finding tenants. The advantage: The owner receives the rent from the operator as the general tenant and not from the residents of the care apartment, even if the apartment should ever become vacant.

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Additional costs of the nursing home

In addition to the purchase price of the nursing home, there are one-time acquisition costs involved in the purchase process. These acquisition costs include notary fees and the property transfer tax applicable in each federal state. Notary fees range between 1.5 and 2.5 percent of the purchase price for every property purchase. 

Real estate transfer tax is payable upon purchase. Depending on the federal state, it currently ranges between 3.5 and 6.5 percent of the purchase price.

The roof and specialist clause for nursing homes

The operator of nursing homes is responsible for maintenance. However, the roof and roofing remain with the homeowners' association.

"Roof" refers to the roof and its supporting structure. "Compartment" refers to the exterior of the building, i.e., the windows and facade of the property, as well as fixed installations such as piping systems.