Primary Care


THE NEED FOR MODERN, PURPOSE-BUILT PRIMARY HEALTHCARE PREMISES REMAINS HIGH ON THE AGENDA FOR THE NHS IN ORDER FOR IT TO BE ABLE TO DELIVER ITS FIVE-YEAR FORWARD VIEW. DESPITE WIDER MARKET UNCERTAINTY FOLLOWING THE RESULT OF THE EU REFERENDUM, PRIMARY HEALTHCARE PROPERTY REMAINS A COMPELLING INVESTMENT PROPOSITION AS WELL AS PLAYING AN IMPORTANT ROLE IN THE FUTURE OF OUR PUBLIC HEALTHCARE SYSTEM.


KEY POINTS


> Cross-party support for a further £325 million of funding into the NHS to support the 15 strongest Sustainability Transformation Plans


> Accountable Care Organisations will require new premises to deliver cost savings


> GP Practices moving towards more collaborative ways of working


> Strong investor appetite continues for good quality stock, underpinned by secure long-term income streams


In both the UK and Republic of Ireland, there has been continued political and crossparty support since the UK general election, with Government plans to inject a further £325 million of funding into the NHS to support the 15 strongest Sustainability Transformation Plans (STPs). The UK government has also promised more will be available in the Autumn budget for other STPs as their strategies evolve. In the Republic of Ireland, there are similar demographic pressures requiring new primary care infrastructure and the Irish government continues to support itsPrimary Care Centre strategy in delivering modern purpose built centres serving local communities.


There continues to be a move towards areas forming Accountable Care Organisations (ACOs), which will lead to a locally integrated health system requiring new premises solutions to deliver cost savings. As well as rising clinical demand and further organisational changes, it has been well publicised that pressure on GPs continues to mount from increased regulation, rising numbers of consultations, funding and recruitment challenges. We are also seeing an increase in practices moving towards more collaborative ways of working and exploring new technological platforms that are slowly changing the way in which premises are designed and being used.


Market rental growth remains challenging for the sector due to a lack of new schemes to set new rental evidence but there is increasing acknowledgement from District Valuers that rising land costs and build costs are supporting higher rents for new schemes. In addition, UK RPI inflation increased 3.5% over the last 12 months to 30 June 2017, providing another strong indication of upward pressure on market rents. Notwithstanding some of the challenges to the market, it has consistently demonstrated resilience and we have seen further yield compression throughout the year, with strong investor appetite for good quality stock underpinned by secure, long-term, stable income streams, reinforcing the attractiveness of the asset class.


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HEALTHCARE MARKET REVIEW 2017 | COLLIERS INTERNATIONAL


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