*1.6.1 Direct and indirect return on healthcare real estate interesting*

The total return on real estate consists of two parts:


In the following **Figure 9** the total, direct and indirect returns for cure and care over the period 2003–2013 are juxtaposed. It shows that cure and care real estate show stable direct returns over this period. However, the total return on healthcare real estate over the last few years is negatively influenced by the negative indirect return from 2008 onward. One explanation for this is the many vacant nursing homes.


#### **Figure 8.**

*Gross initial yields traditional segments and healthcare properties [11].*

*Doubling of Dutch Healthcare Real Estate Investments in 2022 Compared to 2016 DOI: http://dx.doi.org/10.5772/intechopen.112326*

#### **Figure 9.**

*Total, direct and indirect returns (BAR in %) Dutch Healthcare Real Estate Cure and Care 2003-2013 (source: Elp and Konings 2015). Blue line is total return; yellow line is direct return and brown line is indirect return.*

It is now also interesting to look at a return picture of healthcare real estate compared to the IPD Dutch annual real estate index. Over the period 2003–2012, it appears that care and cure real estate returns follow the index. In 2013, it appears that the total return of care real estate is significantly lower than in previous years. One explanation for this is that this concerns a large part of the stock of traditional care homes where alternative use is very limited (**Figure 10**).

#### *1.6.2 Comparisons with other investments favorable*

If we compare healthcare real estate returns with other real estate sectors, investments, stocks and bonds, we can conclude that healthcare real estate is interesting. However, we have to realize that the range of returns on healthcare real estate is limited for comparable statistics because the openness of data is limited, as are the transactions in healthcare real estate (Sharpe ratios are also shown in Van Elp and Konings [11].

#### **Figure 10.**

*Direct and total return (BAR in %) Dutch healthcare real estate care and cure compared to Dutch real estate index, 2003-2013 (Source: Elp, M. and P. Konings (2015). Blue line is total return; yellow line is direct return and brown line is indirect return.*

The Netherlands does not (yet) have a separate index for returns on healthcare real estate like Australia and the UK do. In Australia, over the period 2007–2013, the total return on healthcare real estate exceeded the general Australian real estate index. In the UK this is not the case but the healthcare real estate segment is less volatile than real estate in general in the UK. The following overview (**Figure 11**) compares healthcare real estate in Australia, UK and the Netherlands of the average total return per year for all (healthcare) real estate.

#### *1.6.3 Stable appeal*

During the last few years, the healthcare real estate market is moving towards becoming a stable and mature investment market. More and more players are operating in this market with a number of issues in healthcare real estate creating appeal:

*Doubling of Dutch Healthcare Real Estate Investments in 2022 Compared to 2016 DOI: http://dx.doi.org/10.5772/intechopen.112326*


#### **Figure 11.**

*Direct and total return Dutch healthcare real estate care and cure compared to Dutch real estate index, 2003-2013. Source: Elp, M. and P. Konings [11].*

