Senior housing posts highest property type returns in investment index
LOS ANGELES: Senior housing has emerged as one of the strongest-performing real estate sectors in 2025, delivering the highest property type returns in the NCREIF index through the first half of the year, according to data from the National Investment Center for Seniors Housing & Care (NIC) and the National Council of Real Estate Investment Fiduciaries (NCREIF).
The second quarter built on an already strong start to the year. After a solid performance in Q1, senior housing posted even stronger gains in Q2, outpacing the broader Expanded National Property Index (NPI) once again. Returns for the sector reached 2.08% in Q2, 85 basis points higher than the NPI’s 1.23%. Year to date, the category recorded a 4% total return.
Capital appreciation — the measure of change in net asset value after capital expenditures — came in at 0.72% during the three months through June, while income yield was 1.36%. Both components added to the overall positive performance, NIC reported.
The returns follow a strong showing in Q1, when senior housing generated a 1.87% total return, exceeding the NPI by 58 basis points. Senior housing also led in capital appreciation at 0.54%, compared to the index’s 0.11%.
Within the sector, independent living continued to outpace assisted living across multiple time horizons. During Q1, independent living registered 2.58% in total returns, compared with 1.25% for assisted living. That out-performance extended to one-year (8.03% vs. 3.64%), three-year (3.30% vs. -0.57%), and five-year (5.13% vs. 0.30%) averages. Independent living also led with a 2.15% return compared with assisted living’s 1.99%. Industry analysts point to higher operating margins, lower labor intensity and stronger occupancy as possible reasons for the difference.
Over the long term, however, both segments have delivered similar results, averaging more than 5.5% annually since NCREIF began tracking subtype returns roughly 10 years ago.
Measured against other property types, senior housing has held its ground. Over the past 10, 15 and 20-year periods, it ranked third overall, trailing only industrial and self-storage, while outpacing the broader NPI by 52 basis points over 10 years, 41 basis points over 15 years, and a substantial 297 basis points over 20 years.
Since the launch of NCREIF’s senior housing historical series in 2003, the majority of sector returns have been income-driven. About 60% of returns have stemmed from income yield, with price appreciation contributing 40%. Those figures are based on data from 211 senior housing properties with a combined value of $12.38 billion as of Q2 2025. Over the past decade, the balance has leaned even more heavily toward income, with 83% of returns coming from yield and just 17% from appreciation.
Market fundamentals have reflected the strong performance. Occupancy across the 31 NIC MAP primary markets rose 80 basis points in Q2 to 88.1%, as net absorption exceeded new deliveries. Inventory growth fell below 1% year-over-year for the first time since NIC began tracking the statistic in 2006. Independent living occupancy averaged 89.7% during the quarter, while assisted living reached 86.4%.