Institutional momentum in the French healthcare market

Image: French flag, photographed by Anthony Choren for Unsplash

Q. WHAT IS YOUR KEY TAKEAWAY FROM 2025 FOR SENIOR LIVING AND HEALTHCARE REAL ESTATE?

In 2025, the French senior living and healthcare real estate market demonstrated renewed resilience and stabilisation. Total investment volumes reached slightly above €650 million, confirming that institutional capital remains selectively engaged despite a disciplined pricing environment. Although transaction activity remains below previous cyclical peaks, pricing has largely stabilised at between 6.0% and 6.5% net initial yield (including duties), with super-prime assets in Greater Paris trading in the range of 5.0% to 5.5% NIY.

Investor confidence has gradually returned, particularly for well-located modern assets, long-term sale-and-leaseback structures, and established operators with strong governance and reporting standards. France continues to benefit from deep domestic capital pools and growing interest from pan-European investors. Its demographic trajectory, notably the projected growth of the population aged 75 and over, underpins the long-duration investment thesis. A defining trend in 2025 has been a strong appetite for purpose-built, ESG-aligned facilities. Institutional capital is increasingly directed towards assets that anticipate regulatory requirements, comply with energy performance standards and embed resident-centric design. ESG compliance is progressively viewed as fundamental to long-term value preservation rather than as a differentiating feature. However, operating margins remain under pressure due to wage inflation, staffing shortages and reimbursement indexation constraints from previous years. Greater predictability and long-term alignment of public funding mechanisms with cost structures would materially strengthen underwriting visibility and enhance risk-adjusted returns.

Q. WHAT ARE YOU EXPECTING FROM 2026 FOR THE SENIOR LIVING AND HEALTHCARE REAL ESTATE MARKET?

For 2026, the outlook is cautiously constructive. Transaction volumes are expected to increase as financing conditions normalise. Investors will continue to focus on core and core-plus strategies supported by strong operator covenants, while portfolio optimisation and selective consolidation are likely to continue. There is also expected to be increased capital deployment into refurbishment and ESG-driven repositioning of ageing stock. France remains one of continental Europe’s most institutionalised healthcare markets. As transparency improves and macroeconomic volatility recedes, allocation to the sector is expected to progressively increase within long-income and infrastructure-oriented strategies.

Q. WHAT DO YOU SEE AS THE BIGGEST MISCONCEPTION ABOUT WHAT THE SENIOR LIVING AND HEALTHCARE REAL ESTATE SECTOR ACTUALLY PROVIDES, AND HOW CAN WE IMPROVE THIS?

A persistent misconception is that the quality of care in French senior housing may be structurally weaker than in other European markets. This perception has been influenced by isolated reputational events and historically limited public benchmarking compared with jurisdictions such as Germany and the UK. In Germany, MDK inspection reports provide structured and publicly accessible ratings, while in the UK, the Care Quality Commission publishes detailed facility assessments. France, by contrast, has historically lacked an equivalent level of publicly available, standardised reporting for care homes. Importantly, this is now evolving.

The Haute Autorité de Santé has long operated a structured evaluation framework for hospitals and clinics in France. However, it is only since 2023 that a similar framework has been applied to the social and medico-social sector, including nursing homes (EHPADs), and only since September last year that the scope of this quality framework has been formally published. Since then, the first evaluation reports for care homes have progressively been disclosed. The initial wave of published evaluations is particularly reassuring. Based on currently available data covering approximately half of French EHPADs, around 80% of evaluated facilities are achieving ratings of A or B, reflecting strong compliance and quality standards. Among leading private operators, the proportion of A and B ratings is broadly consistent and often above the average, with some operators indicating that up to 95% of their facilities are rated A or B. This demonstrates a positive correlation between institutional governance, scale and care quality. From both an investor and a resident perspective, this development is significant. The extension of the HAS framework to care homes materially improves transparency and benchmarking capabilities.

It supports more data-driven assessment of operator quality and reduces perception-driven risk. As the rollout continues through 2026 and reporting becomes fully standardised across the sector, France is expected to progressively align with the transparency levels observed in other mature European healthcare markets.

Q. WHAT ACTIONS, TAKEN COLLECTIVELY BY SHHA AND ITS MEMBERS, COULD MOST EFFECTIVELY HELP DRIVE THE MARKET FORWARD?

To further institutionalise the asset class, increased operating transparency in both the nursing home and independent living sub-sectors, including occupancy rates, would be beneficial. The implementation of harmonised ESG and impact reporting standards would also strengthen comparability and investor confidence. In addition, accelerating green financing solutions to modernise legacy assets would support the sector’s sustainability objectives. Continued policy dialogue is essential to ensure sustainable alignment between reimbursement frameworks and operational cost structures. Such measures would reinforce the sector’s infrastructure-like characteristics and support long-term capital formation.

Q. LOOKING AHEAD TO 2040, WHAT DECISIVE ACTIONS TAKEN TODAY COULD HELP ENSURE THAT SENIOR LIVING AND HEALTHCARE REAL ESTATE BECOMES AN INVESTABLE, SCALABLE AND SOCIALLY SUSTAINABLE ASSET CLASS?

To secure scalability to meet demand and ensure sustained investability through 2040, decisive action is required today. Accelerated ESG retrofitting and modernisation of ageing stock will be essential. Public funding mechanisms must be structurally aligned with demographic realities and affordability considerations. At the same time, next-generation integrated care models should continue to be developed. With improving transparency, strong demographic fundamentals and a progressively institutionalised operating environment, French senior living and healthcare real estate is well positioned to consolidate its role as a resilient, long-income asset class within European institutional portfolios.

To access the full 'Senior Housing and Healthcare Real Estate Market' report, click here.