Healthcare real estate between healthcare pressure and housing shortage

Healthcare real estate forms the physical backbone of long-term care in the Netherlands: residential care complexes, nursing homes, assisted living facilities, shelters, supportive care homes, and primary care centers fall under this broad domain. Vastgoedjournaal describes healthcare real estate as a category with attractive fundamentals, but also with inherent risks: fluctuations in value, operating constraints, and regulations that don't always adapt to healthcare needs or demographics.

Simultaneously, the Netherlands is grappling with two operational crises: first, the structurally rising cost of healthcare (for staff, medical equipment, and technology) and second, a housing crisis: a shortage of affordable, suitable housing, significant pressure on mid-range rental housing, and an almost insatiable demand for land and construction. In this context, healthcare real estate becomes a key factor: how can the government use "real estate as a tool" to both make healthcare sustainable and relieve the housing market?

If we look at previous publications about healthcare real estate on Vastgoedjournaal and related
Linked analyses reveal several lessons and recommendations that the next government should consider. What went wrong previously, and what can we learn?

First of all, a classic bottleneck lies in the financing and rental yield model of
Healthcare real estate. Colliers found that high inflation is causing housing costs to rise sharply, while the compensation healthcare institutions receive for their real estate is often too low to cover these costs. By 2028, a residential care complex could be short an average of €30 per square meter. This structural mismatch discourages investments in maintenance, sustainability, and new construction, which can undermine the quality of stay and the reliability of care.

Secondly, the slow development time. The sector reports that processes often take a long time due to zoning procedures, permits, and financing, sometimes leading to projects taking ten years or longer. Combined with rising construction costs and rising interest rates, the business case often becomes unfeasible. Even where demand for care homes is historically high, partly due to the aging population and the housing shortage, supply lags behind.

Third lesson: missed opportunities for more intensive use and transformation. In many regions, existing care facilities are underutilized or do not meet current residential care needs. By converting, adding on, densifying, or reorganizing office spaces, care organizations can create additional care homes and residential care combinations without having to continually acquire new land. This is also being proposed as a solution to enable the construction of 290,000 additional senior housing units by 2030, with care facilities located in existing buildings.
structures can play a role.

There's also the sustainability pitfall: many healthcare properties opt for renovation or improvement of existing buildings instead of demolition and new construction, even though new construction is often more energy-efficient and future-proof in the long run. CBRE emphasizes that all healthcare homes should ideally be energy-neutral by 2050. This requires a strategic long-term vision that doesn't simply respond to current demand.
Finally, there are the regulations surrounding DAEB (General Economic Affairs Department)
Importance). Residential care facilities providing care or support can, under certain conditions, fall under the DAEB (General Administrative Order of the Belgian Government), allowing housing corporations to be involved, but with strict rules regarding rents, allocation, and subsidies. These rules restrict flexibility and make it more difficult to mobilize private investment. The next government can learn from these shortcomings: instead of rigid rules, accelerated procedures, clear long-term frameworks, stimulating transformation, and linking care and housing objectives should be central.

Integrate healthcare real estate into housing policy
To address the housing crisis and healthcare demand simultaneously, healthcare real estate should not be viewed as a separate entity but rather as an integrated instrument within housing and healthcare policy. At a strategic level, the government should already consider residential and healthcare scenarios in area planning: locations suitable for combined residential and healthcare functions can be included in new construction plans, restructuring projects, and neighborhood development. Regional policy could establish a minimum share of healthcare-ready homes or building space for healthcare functions. CBRE's outlook states that ideally, one in three new homes built by 2050 should be healthcare-ready. Reuse and transformation are crucial in this regard: existing office buildings, schools, and healthcare facilities can be used more intelligently within the legal and architectural framework. Accelerating environmental law procedures, permitting changes of function, and removing obstacles to permitting are key.

Compensation models and profitable investments
The government must modernize the rental system and reimbursement streams for healthcare real estate to ensure profitable investments. Reimbursements must cover actual costs, including maintenance, sustainability improvements, and investments, so that healthcare institutions don't find themselves in dire straits. Subsidies, tax incentives, or interest rate reductions can be used to make new construction and renovations more attractive.
One possible model is a public-private partnership (PPP), in which municipalities, healthcare institutions, and investors jointly share risks. The government can guarantee basic services (such as infrastructure and utilities), allowing investors to focus on the quality components. Such contracts should incorporate clear performance obligations, guarantee mechanisms, and flexibility clauses.

Accelerate and harmonize
The government must streamline procedures at every level (national, provincial, and municipal). A single point of contact, digital permitting procedures, and fixed processing times can help. Furthermore, standardization of requirements regarding building standards for care homes, energy requirements, accessibility, and maintenance standards is desirable to avoid unexpected delays and additional costs. Another step is the introduction of "development frameworks" that already provide legal and regulatory frameworks at the start of projects.
Providing spatial frameworks. This allows risk factors to be identified and resolved early on, rather than after the fact. Vastgoedjournaal (Real Estate Journal) discusses the need for an "accelerated development process" (ADC), in which obstacles are identified early on to save time.

Sustainability as a condition, not as an extra
Every new construction or renovation in healthcare real estate must be sustainable, energy-efficient, and future-proof. The government can link stricter energy standards to subsidies and offer green loans or favorable financing for the construction of Paris-proof buildings. It is better to consider demolition and new construction from the outset rather than continually retrofitting outdated buildings. CBRE points out this strategic error when institutions continue to think within a narrow timeframe. The challenges in healthcare real estate vary by region: shrinking regions struggle with vacancy and
Overcapacity; growth regions experiencing shortages and scarcity. The central government should oversee the process, but decentralize implementation so that provinces or regional healthcare and housing consortia can prioritize and develop customized plans. Quality standards and performance-based monitoring can help ensure that projects remain aligned with national goals.

Cautious optimism
Healthcare real estate can be a powerful weapon in countering the dual pressures of rising healthcare costs and a housing shortage, but only if we don't treat it as a final item or a construction challenge in itself. The next government can make a difference with a comprehensive vision, updated reimbursement structures, accelerated procedures, sustainability requirements, and regional management. Past mistakes, including insufficient funding, slow procedures, a lack of integration, and short-term thinking, should serve as warnings. But the opportunities also exist: when properly designed, healthcare real estate can not only improve the quality of life for the elderly but also create space in the housing market. The coming years will be decisive: will we choose fragmentation or a cohesive future in which care and housing are intertwined?
are?

This article previously appeared on Vastgoed Journaal: https://vastgoedjournaal.nl/news/70224/zorgvastgoed-tussen-zorgdruk-en-woningnood