German care market: Between insolvent operators and investment opportunities
Anyone who has ever been in the situation of having to look for a care place for relatives in Germany knows that rooms are scarce and expensive. Of course, costs and availability vary by region, but due to demographic change and empty budgets, it is already clear that the situation on the care market will continue to worsen. Find out what challenges this entails and why the precarious situation on the care market creates new opportunities for investors.
Care in Germany: an emergency
The care market in Germany is an economic, political and social emergency. This is because more and more people in need of care are finding fewer and fewer care places - and the available rooms in homes are becoming more and more expensive. According to the Federal Statistical Office, around 5.7 million people were in need of care at the end of 2023, and that number will be around 6.3 million by 2035 and Up to around 7.6 million by 2055 rise.
Around four out of five people in need of care in Germany are cared for at home. But a place in the home is by no means guaranteed for those who remain. On the one hand, because the economic situation of many nursing homes is dire. On the other hand, because the lack of personnel makes supply difficult. Both factors are also leading to rising costs: At the beginning of 2025, people in need of care had to pay an average of 2,984 euros per month for a home place. Despite increases in care benefits at the beginning of the year, these costs could not be fully covered by the health insurance fund, which poses significant financial burdens for many people in need and their families.
However, the future need for care places is still enormous, as many families simply cannot or do not want to provide care from relatives. According to forecasts, around 322,000 additional inpatient care places will therefore be needed by 2040. To meet this demand, Investments of 81 to 125 billion euros required.
In view of the financial challenges combined with demographic change, Germany must take urgent measures to secure long-term care financing and the necessary infrastructure. Whether the new federal government has any constructive suggestions in this regard remains to be seen. In a Exploratory paper from the Union and the SPD It simply states: “Health care must remain secure for everyone. We want to initiate a major care reform. We stand for needs-based hospital care in the city and in the countryside. ”
Bankruptcies in the care sector are increasing
However, inpatient care in many regions has long since ceased to meet the needs. In 2023 alone, 1,097 care facilities in Germany had to close or restrict their supply. 130 institutions reported insolvency that had already occurred or was imminent, compared to just 26 in the previous year. 5,596 full-time inpatient places and almost 16,000 outpatient places were lost in the past year.
The reasons for the increasing number of insolvencies are manifold. For example, rising costs for energy and personnel place a significant burden on facilities. In addition, the legally required collective bargaining is leading to rising personnel costs, which cannot always be fully refinanced. Another factor is the shortage of skilled workers, which leads to an increased use of temporary work, which further increases costs.
Consolidation opens up new market opportunities
Despite the challenges, there are also positive developments in the care market. While large Operators such as DOREA and Hansa are reducing their portfolio as part of insolvencies , others were able to grow through acquisitions and thus strengthen their market position. Alloheim Senioren-Residenzen SE, for example, has taken over the leadership of the largest nursing home operators and ousted Korian Deutschland GmbH from the top. Despite the challenges in the care market, many of the major operators are therefore continuing to strive for growth. Market consolidation appears to be continuing, while new players are gaining in importance at the same time. For the future, however, it remains to be seen how the planned new nursing homes will affect the market structure and whether the trend towards consolidation will continue.
However, current market changes offer private investors attractive entry opportunities, as without new financing models, there is a risk of a nursing crisis. Especially as North Rhine-Westphalia and Schleswig-Holstein have cut back on property funding in recent years. Nursing properties are now publicly funded only in Baden-Württemberg, Bavaria, Brandenburg, Lower Saxony, Saxony and Saarland.
Private equity to improve the care situation is therefore almost inevitable. However, investments in care properties can be a win-win situation for investors and the care market. This is because nursing properties offer investors stable and long-term income, as rental contracts are often concluded with operators for over 20 years. Depending on location and operator credit rating, the returns are between 4% and 6% per year. In addition, nursing homes are barely dependent on the economic situation, as demand for care properties is likely to rise even more strongly due to demographic change.
However, interested private investors should thoroughly inform themselves in advance. For example, about the location, any upcoming modernization costs and the operating company of the property. This can be an enormous challenge, as the nursing home market knows its own rules of the game. Bad Lauterberg's investment opportunity, which will be launched soon, could fit exactly into this niche.
