International real estate advisor Savills reports that investor demand for European Medical Office Buildings (MOBs) continues to exceed the limited supply of institutional-grade assets, driven by structural shifts in healthcare delivery and growing interest in modern, purpose built facilities.
While MOBs are a well-established, liquid and institutionally recognised asset class in the United States, Europe is at a far earlier stage of maturity. Market development varies significantly by country: Germany leads, the Netherlands is gaining momentum, while France and the UK remain constrained by existing healthcare system structures that inhibit the growth of a fully developed MOB ecosystem.
Following record investment volumes of nearly €1 billion in Germany and the Netherlands in 2021, activity slowed in 2023-2024 as rising interest rates, economic uncertainty and the limited availability of portfolios prevented the sector from sustaining consistent year-on-year transaction volumes.
Healthcare expenditure continues to rise in EU countries, with annual growth accelerating from 3.4% in 2015 to 2019 to 6% between 2019 and 2022. When combined with long term demographic pressures and the shift from inpatient hospital care to outpatient and community-based delivery, this is creating increased demand for high quality, accessible healthcare facilities. With Germany and the Netherlands at the forefront of this transition to outpatient care delivery through reforms such as Ambulantisierung, Krankenhausreform and the Integraal Zorgakkoord, Savills notes that similar policy developments in France and the UK could unlock further opportunities for investors.
With large scale portfolios in short supply, Savills expects continued upward pressure on rents and stabilising yields as market conditions normalise. Early movers are well placed to benefit from future yield compression and the long term defensive qualities of the asset class.
Tom Atherton, Strategy & Market Intelligence Manager at Savills, comments, “The combination of ageing populations, rising chronic disease and policy-driven care decentralisation will continue to fuel long-term demand for outpatient facilities. Medical Office Buildings stand to benefit directly, offering investors stable, counter-cyclical income streams tied to essential services. As transactional evidence builds, lease structures become more standardised and occupier networks mature, European MOBs are set to evolve into an institutional asset class over the next decade, with defensive characteristics comparable to primary care or hospital real estate.”
Caryn Donahue, Head of Healthcare & Senior Housing at Savills, adds, “The US demonstrates what a mature, liquid MOB market looks like, with multi-asset portfolios trading at scale and strong institutional appetite. Europe is at an earlier stage, but the fundamentals are equally compelling. As portfolios are aggregated we expect US capital to increasingly view Europe as an attractive market for deployment in this sector.”
Medical Office Buildings (MOBs), also sometimes referred to in the US as medical outpatient facilities, are commercial real estate properties, typically purpose-built, that host a range of healthcare services that do not require overnight hospital stays such as doctors’ offices (general practitioners and specialist clinics), pharmacies, diagnostic centres, dental clinics, physiotherapy and therapy facilities, occupying the building on multi- or single-tenant leases.