Europe’s Emerging Healthcare Asset Class
Key takeaways
Driven by an increase in elderly populations, supportive regulation, changing healthcare needs, outpatient care reform and institutional investor interest, Medical Office Buildings (MOBs) are evolving from a niche asset type into a recognised and investable part of Europe’s healthcare real estate market.
- MOBs are commercial real estate properties, usually located near hospitals or high-traffic medical hubs, that are typically purpose-built and host a range of healthcare services that do not require overnight hospital stays (for example, doctors’ offices, pharmacies and diagnostic centres), occupying the building on multi- or single-tenant leases.
- In the US, MOBs are a long-established, institutionalised asset class with proven income stability and liquidity. Europe remains at an earlier stage of market maturity and varies widely in its use of MOBs across geographies.
- Pension funds, REITs, private equity, and infrastructure investors are starting to expand into MOBs in Europe, seeking long-term, inflation-linked income. Investment volumes remain constrained by limited availability of high-quality assets. However, with lower capital requirements per asset but similar fundamentals to hospitals, MOBs provide an accessible route for a broader range of investors to gain exposure to the cure market in Europe.
- The European MOB market is currently dominated by single-asset deals, as few institutional-scale portfolios exist. These smaller properties often fall below the investment thresholds of REITs and large institutional buyers, trading at higher initial yields and offering an accessible entry point for smaller investors, with scope to aggregate portfolios and exit at more attractive yields once scale is achieved.
- Germany and the Netherlands are the most investable markets given their regulatory alignment, supportive practitioner ecosystems, and insurance-based funding.
- France and the UK do not yet have a true MOB model, though ongoing shifts toward community-based and integrated care could eventually lead to the development of comparable formats. In the near term, investment opportunities are more likely to emerge in similar asset types supporting these evolving models of care.
- A functioning MOB market relies on the separation of healthcare delivery from property ownership, where independent doctors and outpatient operators lease rather than own their premises. The model performs best in decentralised, insurance-based systems with a strong base of independent practice, generating diverse tenant demand.
Introduction
Often strategically located near hospitals or high-traffic medical hubs, MOBs centralise outpatient services, enhancing patient convenience and accessibility.
They typically include doctors' offices (general practitioners and specialist clinics), pharmacies, diagnostic centres, dental clinics, physiotherapy and therapy facilities, designed specifically to accommodate medical equipment, shared waiting areas, examination rooms, and efficient administrative spaces.
By decentralising healthcare delivery and reducing pressure on larger hospitals, MOBs can play a key role in efficiently addressing community healthcare needs.
The separation of real estate ownership and medical operation is what makes MOBs a distinct and scalable asset class. The owner acts as a landlord, collecting rent from either single or multiple healthcare tenants under 10- to 15-year commercial leases.
The model has gained traction in Germany and, to a lesser extent, the Netherlands, where regulation and practitioner behaviour support the MOB model.
It remains limited or non-existent in other major European healthcare real estate markets like France and the UK, where outpatient facilities are typically leased or owned by a single operator or healthcare provider, and there is a lack of independent practitioners or multidisciplinary tenants that would support an MOB model.
Importantly for investors looking at this emerging asset class in Europe, MOBs in the US have proven to be a defensive, income-stable real estate sector, with demand for healthcare services largely insulated from economic cycles.
Even during downturns such as the global financial crisis and the Covid pandemic, US MOBs maintained high occupancy levels and steady net operating income, outperforming many traditional real estate sectors. In the US, healthcare delivery is highly decentralised, with a large share of physicians operating independently or in small group practices and therefore requiring leased medical office space outside of hospital campuses.
MOB Market Review
The MOB sector in Europe remains a nascent market, with adoption rates varying significantly across countries and still far less established than in the US, where outpatient healthcare real estate is long-standing and deeply institutionalised.
Within Europe, Germany represents the leading market, while the Netherlands is emerging as a key area of growth. By contrast, France and the UK remain structurally constrained by their centrally funded healthcare systems, making the development of a US-style MOB market unlikely in the near term.
These regional disparities largely reflect differences in healthcare delivery models and institutional structures within national health systems. However, in European geographies where healthcare systems make MOBs feasible, a clear shift is underway. As healthcare provision becomes more decentralised, outpatient services are moving away from main hospital campuses and into community-based settings, driving growing demand for modern, purpose-built space.
The viability of MOBs is closely tied to the degree of decentralisation within a country’s healthcare system and the balance between public, non-profit, and private providers.
A functioning MOB market relies on the separation of healthcare delivery from property ownership, where independent doctors and outpatient operators lease rather than own their premises.
This model performs best in decentralised, insurance-based systems with a strong base of independent practice, generating diverse tenant demand from clinics, diagnostic centres, and specialists seeking flexible, modern premises.
It has been most successful in Germany and the Netherlands, where insurance-based frameworks and a mix of public, non-profit, and private providers enable leasing models to thrive, unlike systems that concentrate care delivery within state-owned hospitals, where investor-owned MOBs are less viable.
Germany leads in both scale and maturity, supported by its mixed public–private system, a large number of self-employed physicians who prefer to rent rather than own their premises, and healthcare policies that continue to move treatments toward outpatient environments.
The Netherlands, while smaller in absolute scale, is demonstrating strong growth momentum underpinned by structural reform, insurer incentives, and an expanding base of independent treatment centres (ZBCs) and integrated health hubs.
Together, these dynamics are fostering the gradual development of the MOB market across Europe.
France is emerging as a potential future MOB market, supported by growing investment in community-based clinics and specialist outpatient centres.
However, the French healthcare system remains dominated by private clinics that are typically leased or owned by a single operator or healthcare provider, alongside publicly funded health centres, leaving few independent doctors or clinics that would lease space in an MOB format.
Similarly, the UK does not have an MOB market, reflecting the NHS’s centralised model and limited reliance on private-sector outpatient services, aside from a few emerging specialties such as ophthalmology.
In the UK, independent doctors are typically contracted by private providers or, when working independently, will lease space within private hospitals or NHS Private Patient Units (PPUs).
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Strong Demand Drivers Shape the MOB Market
Across Europe, long-term tailwinds such as population ageing and the shift towards outpatient care are fuelling demand for purpose-built, community-based healthcare facilities. In markets where healthcare systems support the MOB model, these assets are becoming increasingly attractive as a real estate investment opportunity, offering long leases, high-quality tenants with strong location loyalty, and resilient demand drivers.
Ageing Population & Growing Burden of Chronic Disease
Europe is facing a profound demographic shift that will reshape its healthcare and social infrastructure over the coming decades. The number of people aged 65 and over in the EU-27 is projected to rise from 97 million in 2024 to nearly 130 million by 2050, even as the region’s total population remains broadly stable.
The most pronounced expansion will occur among older cohorts: the 75–84 age group is expected to grow by c.50%, while the 85+ population is projected to nearly double over the same period.
This means that while Europe’s overall population will barely grow, the proportion of older adults will rise sharply, causing a large increase in the ratio of working-age adults to elderly populations, and intensifying the economic and healthcare burden across Europe.
This ageing trend, combined with the growing prevalence of chronic conditions such as diabetes, cardiovascular disease, and neurodegenerative disorders, is leading to greater demand for continuous and preventative care.
Healthcare systems across Europe, already stretched by capacity constraints and rising patient volumes, are increasingly turning to outpatient delivery models to alleviate pressure on hospitals, reduce costs, and deliver care closer to where people live.
This structural shift towards community-based care is expected to underpin rising demand for modern, well-located healthcare real estate throughout Europe.
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Strong Growth in European Healthcare Expenditure
Since the Covid pandemic, healthcare expenditure across Europe has accelerated, outpacing pre-2020 trends, as governments and insurers expand capacity and funding to meet rising demand.
Between 2015 and 2019, the annual growth in healthcare expenditure for EU countries was 3.4%, vs 6% between 2019 and 2022.
Shift to Outpatient Care
Across Europe, healthcare delivery is undergoing a structural shift, from inpatient hospitals to outpatient settings, as health policy increasingly prioritises moving appropriate care out of hospitals and into outpatient and community-based facilities.
Hospital inpatient stays are more expensive, and both governments and insurers are incentivising care to be delivered in lower-cost ambulatory facilities whenever appropriate.
In Germany, for instance, only around 27% of total health expenditure goes on hospitals, much lower than in Southern Europe, where Spain allocates 45% and Italy 43%, reflecting a more decentralised care model.
Other countries are following Germany’s lead by reducing hospital utilisation and diverting many services to outpatient clinics.
This trend is evident in the growing share of healthcare expenditure being directed towards ambulatory care rather than hospitals, despite a temporary dip in 2020 due to Covid.
Given the lower cost of procedures in outpatient settings, the shift is even more pronounced when measured by admission volumes, but comparable data is not available across countries.
Post-Covid Healthcare Delivery Changes
The Covid pandemic was a catalyst for structural change in healthcare delivery, accelerating trends that favour the development of MOBs. The pandemic placed unprecedented pressure on hospital capacity and underscored the need for resilient, decentralised outpatient infrastructure to reduce reliance on hospitals.
During pandemic surges, many routine consultations, diagnostics, and elective procedures were postponed, creating a substantial backlog of care that continues to drive elevated demand for clinic and diagnostic space to accommodate people waiting for appointments, tests and procedures.
Technology and Treatment Innovations
Advancements in medical technology, from minimally invasive surgical techniques to advanced imaging and lab diagnostics, enable more procedures to be done on an outpatient basis.
For example, surgeries that once required a hospital stay can now be done in ambulatory surgery centres.
European governments aiming for ‘value-based care’ are supportive of this as it can lower costs and improve patient convenience.
The result is rising demand for specialised outpatient centres, e.g. day-surgery clinics, endoscopy centres, dialysis clinics, all of which can be housed in MOBs.
Tenant demand is also diversifying: beyond GP offices, MOBs now host niche providers like fertility clinics, physiotherapy and wellness centres. This diversified demand will support the continued development of new MOB space.
Key MOB Markets in Europe: Germany and the Netherlands
Policy-Driven Demand
Germany’s outpatient sector has evolved from a fragmented base of small practices into a more consolidated, multi-disciplinary system. Since the 2004 introduction of Medizinische Versorgungszentren (MVZs), groups of doctors have increasingly co-located within shared facilities, driving demand for larger, purpose-built medical facilities.
The MVZ was established through the Health Modernisation Act to modernise and integrate outpatient healthcare delivery by enabling doctors from different specialties to work together within a single, jointly managed organisation.
MVZs provide a wide range of outpatient services, from general medicine and diagnostics to specialist consultations, all under one roof. Over the last two decades, this has created growing demand for larger, purpose-built or refurbished premises, such as modern MOBs located near hospitals or within communities.
Germany is now undergoing another major structural transformation in healthcare delivery, shaped by two closely connected federal initiatives: Ambulantisierung and the Krankenhausreform. Both reforms share the goal of rebalancing the healthcare system by transferring suitable medical procedures from inpatient to outpatient settings and ensuring hospitals focus on more complex, specialised treatments.
Ambulantisierung refers to the ongoing shift of diagnostic, surgical, and rehabilitative procedures, traditionally performed in hospitals, into outpatient environments that do not require overnight stays.
As part of this, a new reform, Ambulantisierungsgesetz, is expected to take effect in 2025, which expands the range of treatments eligible for outpatient reimbursement, incentivising hospitals to deliver more procedures outside inpatient settings.
As patient treatment increasingly moves out of hospitals and into outpatient environments, this reform is expected to generate sustained demand for modern MOBs
Krankenhausreform, formally adopted in November 2024 and effective from 1 January 2025, restructured hospital provision by concentrating complex care in specialist centres, downsizing general hospitals, and shifting lower-acuity care into community-based settings.
The reform is expected to result in the closure of around 20% of hospitals across Germany.
As patient treatment increasingly moves out of hospitals and into outpatient environments, this reform is expected to generate sustained demand for modern MOBs and integrated health centres that can accommodate multi-specialty outpatient provision.
The Netherlands represents an emerging market for MOBs in Europe, underpinned by a decentralised outpatient healthcare system and strong policy support for integrated, community-based care.
A key policy driver is the Integraal Zorgakkoord (IZA), introduced in 2022, which aims to shift appropriate hospital treatments into outpatient and independent treatment centres (ZBCs – Zelfstandige Behandelcentra) as part of a nationwide integrated-care strategy.
Dutch health insurers play a pivotal role, actively incentivising outpatient treatment to control costs and improve efficiency.
This is reinforcing the expansion of specialised clinics in areas such as ophthalmology, orthopaedics, dermatology, and diagnostics, fuelling demand for modern, flexible, and community-based medical real estate.
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Health Expenditure is Growing Above the European Average in Germany and the Netherlands
Germany and the Netherlands have recorded some of the fastest expenditure growth, with German spend increasing 6.8% and the Netherlands increasing 6.5% between 2019–2022, compared to 6% for the EU-27 average. Healthcare expenditure growth has outpaced inflation, strengthening the income base of healthcare providers and tenants of MOB.
Germany allocates around 12% of GDP to healthcare, compared with an EU-27 average of 10.4%, the highest share among member states. Between 2015 and 2022, German healthcare expenditure had the strongest growth among the five largest EU-27 economies (Germany, France, Italy, Spain, the Netherlands).
Spending in German private medical practices reached €119 billion in 2022, up 44% over the decade and accounting for 24% of total healthcare expenditure, a share comparable to hospitals.
The Netherlands’ funding environment is also strongly supportive of healthcare expansion. Total healthcare expenditure reached approximately €113 billion in 2024, representing an increase of 59% since 2015 and an average annual growth rate of 5.3%. This outpaces both Germany’s 57% rise over the same period and the EU-27 annual growth rate of 4.5% between 2015 and 2022.
Spending on both hospital and ambulatory care in the Netherlands has risen faster than in any of the five largest EU-27 economies, with outpatient expenditure outpacing growth in hospital spending. Backed by the Integraal Zorgakkoord (2022), this shift toward community-based, cost-efficient care is driving long-term demand for modern medical office and outpatient facilities.
Rise in Private Clinics and Outpatient Services
Germany had 4,897 Medical Care Centres (MVZs) in 2023, more than double the 2,240 recorded in 2011, representing an average annual growth rate of 8.6%. Around 44% are hospital-operated, 43% physician-led, and 13% run by other entities. The expansion of MVZs reflects the shift from fragmented solo practices to integrated, multi-specialty outpatient care.
While MVZs are not required to be located within MOBs, such properties provide ideal conditions for their operation, offering the space, accessibility, and infrastructure suited to multi-specialty outpatient care. Germany’s MOB market totals c.8,000 buildings (typically averaging 1,000–10,000 sqm in size) and remains highly fragmented, offering scope for consolidation.
With strong growth in private practice activity and increasing demand for purpose-built medical office space, Germany presents a compelling opportunity for investors looking to enter the MOB market.
The Netherlands has seen a long-term trend towards outpatient provision, with the number of registered private clinics rising from 418 in 2016 to 743 in 2023, a 78% increase.
In 2011, there were only around 250 private clinics, meaning the number has tripled over the past decade. This expansion reflects the growing share of treatments being performed in outpatient facilities.
Overall, the Netherlands combines a well-funded healthcare system, a clear policy shift towards outpatient treatment, and a rapidly expanding base of independent operators.
This alignment of structural, financial, and policy drivers positions the Netherlands as one of Europe’s most attractive emerging markets for MOB investment.
MOB Investment
Investor Demand Remains High but Market is Limited in Availability of High-Quality Purpose-Built Assets
Attracted by a favourable supply–demand imbalance, strong underlying growth drivers, and the emergence of modern, high-quality assets, the European MOB sector has undergone increasing institutionalisation over the past decade, supported by a growing tenant base and an influx of institutional capital.
Following the Covid period, when interest rates were at decade lows and demand for outpatient care outside hospitals accelerated sharply, investment volumes in the MOB sector reached record levels, approaching €1 billion in 2021 across Germany and the Netherlands combined.
As institutional participation in the asset class increased, a growing number of sizeable portfolios were created and brought to market. However, while portfolio activity has expanded, opportunities of scale remain limited, preventing the sector from sustaining consistent year-on-year transaction volumes.
Activity remained elevated through 2022 before declining in 2023 and 2024, largely due to rising interest rates, a higher cost of capital, broader macroeconomic uncertainty, and a shortage of high-quality portfolios being brought to market.
The slowdown in MOB investment activity reflects both the limited availability of institutional-grade portfolios and the sector’s relative immaturity as an emerging asset class in a more challenging macroeconomic environment, which constrained investor confidence and liquidity. As a result, transactional activity declined even as underlying occupational demand remained robust.
Recently, the sector has attracted interest from a broad range of investors, including pension and insurance-backed institutional capital, REITs, private equity firms, and dedicated healthcare infrastructure funds.
HIH Invest, a German institutional real estate investment manager, acquired a health centre and office building in Michendorf, Germany, in September 2022. In May 2023, Cofinimmo, a Belgium-listed healthcare REIT, acquired the Baandert Medical Center in Sittard, the Netherlands, at a cap rate of 6.0%. The asset was delivered as a turnkey property with a 13-year WAULT.
In June 2024, Swiss Life Asset Managers, a European insurance and pension fund manager, acquired an MOB in Wolfsburg comprising 29 rental units occupied by specialist practices and providers of medical services and products.
Additionally, TSC Real Estate is raising a €200 million fund, announced in September 2025, to invest in German outpatient medical centres, highlighting strong positive sentiment for the German outpatient real estate sector.
European VS US MOB Yields
In the United States, where the sector has long been institutionalised and benefits from an established investment track record, MSCI data indicates that MOB yields compressed steadily in the decade up to 2022, supported by entrenched structural trends in outpatient care delivery, strong fundamentals, and defensive income characteristics.
From early 2023, US and European cap rates have experienced an expansion due to higher interest rates and tighter debt markets, increased risk premiums, and an uncertain macroeconomic outlook, with the US currently trading at c.7% and Europe trading at c.6.5%.
The long-term view shows European markets trending below the US, likely due to the lack of quality stock increasing competition for prime assets, with a convergence seen more recently.
This trend in yields, together with resilient fundamentals, a more active investment market, and a limited but increasing number of institutional-grade portfolios as investors continue to aggregate assets, should support interest from global capital and especially US capital in European MOBs going forward.
Investment Opportunity - US MOB Market Demonstrates European Potential
In 2024 alone, MOB investment volumes in the US reached over $9 billion with several sizeable portfolio trades in 2024–2025, underscoring the continued liquidity and institutional interest in US medical office real estate.
In Europe, most MOB transactions involve single assets, as the market currently lacks acquirable, institutional-scale portfolios. These smaller properties typically fall below the investment thresholds of REITs and large institutional buyers and can therefore be acquired at higher initial yields, despite offering comparable fundamentals and risk profiles to larger assets.
As a result, MOBs present an attractive entry point for smaller-scale investors seeking exposure to the healthcare sector, where the lot sizes for larger assets such as hospitals are often beyond reach.
This also offers a compelling opportunity to aggregate portfolios and ultimately exit at more attractive yields to institutional capital once scale is achieved.
Meanwhile, consolidation in outpatient and clinic markets is gaining traction across Europe.
Many independent practices are being acquired by larger clinic chains or health service groups, particularly in segments like diagnostics and specialist outpatient care.
This trend enhances the credit quality of tenants, benefiting landlords and improving the institutional appeal of the sector over time.
MOBs represent a complementary investment opportunity for those already investing in clinics and outpatient centres, as these asset types are often sold together in portfolios across both the US and Europe and share similar investment fundamentals and tenant profiles.
Aggregating MOBs and clinics into combined portfolios can provide a route to achieving institutional scale, a strategy that has already been observed in several recent transactions.
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Conclusions
- The combination of ageing populations, chronic disease prevalence, and policy-driven care decentralisation will continue to fuel long-term demand for outpatient facilities. MOBs benefit directly from these structural demand drivers, offering investors stable, counter-cyclical income streams tied to essential services.
- Both Germany and the Netherlands combine supportive insurance-based healthcare systems, pro-outpatient regulation, and expanding practitioner leasing ecosystems. The policy shift in Germany with Ambulantisierung and Krankenhausreform, and Integraal Zorgakkoord (IZA) in the Netherlands, is accelerating the shift of treatments from hospitals to community settings, driving sustained demand for modern outpatient space.
- Although currently constrained by public ownership and operator-led models, reforms promoting community and integrated care, such as France’s Ma Santé 2022 and the UK’s Primary Care reform as part of the Ten-Year Plan, could gradually create new opportunities for healthcare real estate investors. While these markets are not yet suited to true MOB formats, they could offer complementary healthcare real estate opportunities with similar fundamentals.
- Limited availability of investment-grade stock, combined with strong occupational demand, will maintain upward pressure on rents and stabilise yields once macroeconomic conditions normalise. Scarcity of large portfolios will continue to favour aggregation and development plays.
- As transactional evidence builds, lease structures become standardised, and occupier networks mature, MOBs are set to evolve into an institutional asset class over the next decade, with comparable defensive characteristics to primary care or hospital real estate.
- Early participants stand to benefit from yield compression as interest rates and broader macroeconomic uncertainty ease, alongside sustained structural growth as the market matures.