Ireland is at the beginning of a demographic shift, with the elderly population increasing at a pace the country has not witnessed before. We have already seen a rise in the population aged 65 and over; reports are now suggesting that the demographic aged 75 and over will increase by more than 200 per cent over the next 20 years.

These increases are inevitably placing a significant demand on the healthcare system in Ireland resulting in a renewed focus on advancing the primary care strategy in the country. 

Savills research shows that demand for Primary Care Services (PCS) in Ireland by adults aged 65 years and older is projected to increase by 24.9 per cent by 2022. At the other end of the spectrum, demand for GP consultants for children under six years of age is set grow by 42.4 per cent by 2022.

It is obvious from these figures that primary care services, which encompass all of the primary health related services found outside of hospitals, are pivotal to the health system reform in Ireland. However, in order to meet these sharp increases in demand, considerable investment and development will be required.

Our research suggests that there are approximately 90 Primary Care Centres currently in operation across Ireland, which have been developed either through self-build, public-private partnership or private development with an operational lease to Health Service Executive and other providers. In terms of the development pipeline, this appears healthy with approximately 80 centres at varying stages of development and some due for completion in mid-2018.

Interestingly, until 2016, the Irish market had not seen any investment transactions in the Primary Care Centre market. However, appetite has gradually increased over the last two years as healthcare establishes itself as a more mainstream investment class. In addition, the RPI/CPI or fixed uplifts associated with primary care investments, combined with a less competitive market and the sustained future demographic trends, creates an appealing proposition for investors.

With this in mind, we predict that yields for Primary Care Centres in Ireland have the potential to move in by approximately 25-50 basis points in the short term, with the capacity for further compression, thus making them look attractive compared to traditional commercial property sectors.

This new interest in such assets, as well as the fact that buyers are becoming more educated in this specialist investment market, is a very positive sign for a sector that faces increasing pressures from a significant rise in demand.

Further information

Contact Savills Healthcare