However, over the next few decades the military establishment on the Rock was considerably reduced. The last UK based army battalion, 1st Battalion Royal Green Jackets, left Gibraltar in 1991 and the Royal Gibraltar Regiment was now tasked with local defence. In line with the vast reduction of military personnel the RNH closed down most of its wards and facilities.
It was not until 2004 that MOD Gibraltar began to dispose of a number of sites surplus to requirements in the form of a series of Land Agreements which included parts of the RNH. By 2007, the capacity at the RNH had been reduced to just 25 beds. The RNH was replaced that same year, by a new multi-million pound, purpose-built medical facility, the Princess Royal Medical Centre, located in Devil's Tower Camp and the whole of the former complex was transferred to the Government of Gibraltar.
Meanwhile, conversion of portions of the hospital to apartments had started as early as 2006. Taylor Woodrow (Gibraltar) Ltd. integrated the historic architectural features of the original Block A building with twenty-first century luxury. The first phase of hospital conversion was named Orchid House and included eleven luxury apartments. Clifton Mews and Edward House which was constructed within an Edwardian former senior ratings' building soon followed.
The rest of the complex however, had been left vacant for a number of years and it was noted that the physical fabric of many parts of the buildings had by then deteriorated rapidly. Serious consideration to demolish the condemned buildings was given. In its own assessment with regard to the state of the former Hospital the Town Planner noted that:
‘Due to the historical and architectural value of the hospital, the preference would be for the retention of the existing buildings and their conversion for an alternative use that respects their character and appearance. Only in the eventuality that the Government is satisfied that it would not be feasible or viable to retain the buildings would a new build scheme be considered for this site’.5
Plans to convert the old RNH into a new Alzheimer’s and dementia sufferers’ residential home into a 92 bed facility, formerly proposed in 2011 by the then GSD Government, was subsequently revised by the new GSLP/Lib Government which in 2012 opted to reduce its original capacity to create instead a more fit for purpose 52-bedroom Mental Health facility and a separate Dementia Day Care Centre facility, including eight respite beds. Renovation works which began in 2012 were completed in early 2015 to be known as Ocean Views. Further facilities; the Bella Vista Dementia Day Centre and Hillsides Dementia Care Residential Facility were completed in 2017.