According to CBRE’s latest U.S. Seniors Housing & Care Investor Survey, investor appetite for seniors housing & care real estate continues to grow, with the majority of investors who specialize in the sector planning to increase the size of their portfolios in 2017.
The 2017 survey reveals the intentions of the most influential seniors housing investors, developers, lenders and brokers throughout the U.S. Despite investors‘ expectations for rising interest rates, nearly 60% of respondents expect to increase the size of their portfolios in 2017 compared with 47% a year ago.
Compared with prior survey results, the change in expectations for capitalization rates was negligible, indicating the possibility for more pricing stability. The number of investors anticipating a rise in cap rates increased to 44% from 33% a year ago, with only 4% expecting to see a decrease. More than half (52%) of investors expect capitalization rates to remain stable over the next year.
“As the sector goes through a period of “institutionalization”, the corresponding operational results will continue to evolve with greater efficiencies and innovative design trends, which will be welcomed by investors and developers in the face of increasing supply. The seniors housing investment market is expected to move into a more rational transaction period as capitalization rates slowly increase. A shift in investors’ focus from development and acquisitions to portfolio and operating platform optimization is also likely. Sound property level operations, capital inflows from foreign investors, and moderated development trends will be critical to maintaining short-term valuations,” said Zach Bowyer, managing director, Valuation & Advisory Services