France Healthcare Update

Newmark Knight Frank - Global Healthcare Services (GHS) Co-Leader and Executive Managing Director, Garth Hogan, continues to advance through Europe. He recently toured French healthcare facilities with Vincent Bollaert, Head of Capital Markets France, and David Bourla, Chief Economist, based in the Knight Frank Paris office. David put together an overview of the current state of healthcare in France which, in summary, shows a dramatic increase in healthcare spending as well as a sharp increase in investment demand, which has nearly doubled in 2017 from 2016.

Healthcare Spending:

Besides financial services, healthcare is one of the biggest sectors in global economy. Healthcare spending is forecast to nearly double (5.5% CAGR 2012-22) from US$6.2trn in 2012 (US$8.4trn 2015) to US$12.3trn in 2022. Developed markets are forecast to expand at a 3.8% CAGR with emerging markets at a 10.4% CAGR.

- Care-oriented services, principally performed in dedicated facilities such as doctor’s surgeries, hospitals, rehabilitation clinics and nursing homes, represent nearly three-quarters of total healthcare spending in the OECD. One-sixth is spent on medical products (drugs and medical devices) for outpatient use.

- The European acute & rehab sector represents 56% of healthcare spending in the region, while the long-term care sector constitutes a disproportionately high 14% share of the total market – a reflection of the relatively older population in the region compared to the global average.

Investment Volumes:

- The dynamism of the French market is illustrated by the sharp rise in investment volumes which have more than doubled in the healthcare sector in three years, increasing from almost €750m in 2014 and €1.3bn in 2015 to almost €2bn in 2016. In 2016, sums invested on the healthcare property market accounted for over 6% of all investments made on the French commercial property market, after 4% in 2015 and 2.5% in 2014.

- Particularly sought-after by new investment vehicles and large investors looking to increase their exposure to this asset class, portfolio acquisitions are one of the main reasons for this spectacular rise.

These trends are very similar to what we are seeing in the UK. Private healthcare is expanding by building new clinics and acute care/outpatient facilities as EU populations are aging and requiring higher demands for care, while the existing public care funding is becoming more challenged. Our team will continue to monitor the opportunities for capital and growth.


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