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Social infrastructure properties retained their value best last year and outperformed the average of all property sectors, according to KTI statistics. Long lease agreements and financially sound tenants—often public sector organizations or providers of statutory services—helped drive rent increases and maintain high occupancy rates, with KTI data showing a utilization rate of over 98%. These properties remain attractive due to their low-risk profile, long-term leases, and demand that is largely unaffected by economic cycles.
The market size of the social infrastructure sector continued to grow last year, alongside increasing interest from international investors. Evidence of this includes the entry of a new international investor into the Finnish market during the past year. The aging population presents a significant market opportunity in elderly care, substantially increasing demand for care services in the future. Changing demographics are putting pressure on municipalities and wellbeing services counties to develop residential care services. More diverse and high-quality care solutions are needed to meet growing needs in a sustainable and efficient manner.
“The building stock used in social and health care is, on average, outdated—over 50 years old—and renovations have been delayed in many areas, according to FCG. Uncertainty about the organization of social and health services and a reluctance to invest in property maintenance have further deteriorated building conditions. At the same time, legislation increasingly requires more versatile and higher-quality care facilities to meet the growing needs of an aging population. However, renewal of the building stock is progressing slowly, and some existing facilities no longer meet modern standards. This creates opportunities for private operators, who can offer up-to-date premises, take responsibility for their functionality, and help outsource real estate risk and investment responsibility,” summarizes Anton Takkavuori, Real Estate Analyst at Retta Management, describing the current state of the elderly care property market.
Social infrastructure properties maintained their market value better than any other real estate sector in KTI’s statistics last year. In addition, future rental outlooks are positively impacting the market values of social infrastructure properties, according to KTI. Total returns in the sector rose to 4.6% in 2024, as value declines slowed to around 1% on average.
Prime yield requirements in the sector have remained stable for several quarters, both in elderly care and early childhood education segments. Forecasts suggest a slight decline in yields in the coming years, further supporting positive value development. The sector’s strong fundamentals—such as demographic changes and long leases—provide a stable foundation for the future. Favorable positioning is also reflected in growing investor interest.
In the short term, recovery in the transaction market relies heavily on the return of foreign capital. According to statistics, foreign investors are increasingly discovering the Finnish care market. Last year, a new international investor, Public Property Invest (PPI) from the Oslo Stock Exchange, entered the sector and has continued acquisitions during the current year. In Q1 2025, social infrastructure properties even topped the transaction statistics, reaching €170 million in volume and a 27% market share in KTI’s transaction tracking. While executing large deals has remained challenging, average transaction sizes are increasing again.
The baby boomer generation is reaching old age in this and the next decade, significantly increasing the need for care. Despite this, wellbeing services counties are reducing the supply of 24-hour care placements. Many counties aim to shift the focus to lighter services and reduce the use of intensive care options with high staff ratios.
24-hour assisted living is being replaced with so-called communal housing, as outlined in the new Social Welfare Act that took effect last year. However, experts point out that the group of people for whom communal living is suitable may be quite limited (Source: “Näin hoivasta leikataan: Tuhannet vanhukset jäävät ulos ympärivuorokautisesta hoivasta” | HS.fi). There is still little research on communal housing, and specialists are concerned about its suitability, particularly for elderly individuals who require intensive care. Many question whether communal living is appropriate for current users of 24-hour care, especially if individuals with memory-related illnesses are excluded.
As memory disorders progress, they inevitably lead to the need for assistance and eventually 24-hour care, which requires additional resources in elder services. According to the Finnish Academy of Science and Letters, the number of people with memory-related illnesses may double by 2050.
Overall, the role of communal housing in the care pathway for those with memory disorders remains unclear. Since these illnesses are currently incurable, a large share of affected individuals will eventually require 24-hour care. According to a science briefing published by the Finnish Academy in May 2025, more 24-hour care placements are needed in the coming years. Researchers argue that this rapidly growing public health issue poses an unprecedented challenge to the social and healthcare system.
According to a survey conducted by HALI ry titled “Report on Care Queues for the Elderly,” about 2,200 elderly individuals were waiting for a care placement at the end of 2024, even though service decisions had already been made. Additionally, a large number are still awaiting service needs assessments. At the same time, thousands of care home places in private and non-profit units remain empty because wellbeing services counties continue to prioritize their own units and underutilize existing capacity. HALI ry states that if elderly people were placed in appropriate care in a timely manner, the nationwide savings potential could reach tens or even hundreds of millions of euros per year. Moreover, HALI ry—representing private care providers—has long criticized the fact that care provided in municipally run facilities is more expensive than in private ones.
By law, a care place must be provided without delay, and no later than within three months. In reality, many wait significantly longer—often in inappropriate and costly services. These delays are described not only as illegal but also inhumane. As public coverage is reduced, more elderly individuals or their families turn to private services, increasing demand for private care homes, home care companies, and other operators. This shift moves care provision toward the private sector and increases the importance of private real estate owners in care solutions.
“As the population ages, the need for care services grows, even as 24-hour care placements are being cut. As a result, it is likely that wellbeing services counties and municipalities will increasingly rely on private service providers, which will also increase demand for modern care properties. The largest care groups have expanded their operations by acquiring smaller operators and developing new care homes in cooperation with real estate investors. Properties form a business area of their own that requires significant investment but provides long-term lease agreements and stable cash flow in return. We therefore anticipate increased investment activity in social infrastructure properties, with private care providers acting as growth drivers,” Takkavuori concludes.
Additional Information:
Anton TakkavuoriReal Estate AnalystRetta Managementanton.takkavuori@rettamanagement.fiPuh. 0400 853 528
*Figures are based on publications and statistics by FCG, HS, Hali ry, Suomalainen Tiedeakatemia ry and Yle
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