Australia’s medical real estate which includes GP clinics, imaging, day hospitals, dental and allied health have delivered resilient income and low vacancy for an extended period and have been supported by essential demand and tight supply.
- Demographics and Demand – Australia’s population keeps on growing, our share of Australians aged over 65 is rising and they account for 2 to 3 times the healthcare spend of younger Australians.
- Medicare covers around 80% to 85% of all GP services bulk billed and the annual spend is about 10% of GDP
- Long Term Tenants – Many specialist service providers such as radiology and day hospitals require a high spec fit out and compliance with stringent building codes such as class 9a.
- Limited Supply – Zoning, parking constraints and stringent building codes limit rapid increases in stock. Cost escalation since Covid has further restricted development. Many catchments remain under supplied with most of the new stock centered around dedicated medical precincts.
- Clinician Shortages – Australia faces a shortage of medical service providers including nurses.
What To Look For
- Catchment growth and age profile, proximity to Hospitals, transport and a local referral network.
- A diversified tenant mix – doctors, pathology, dentists, imaging all in close proximity to each other offering an all inclusive service.
- Strong lease covenants
The Bottom Line
Non discretionary demand, stable funding, tenant stickiness and constrained supply have underpinned strong performance to date. With increasing population, ageing population, chronic disease prevention and a shift to longevity, Australia’s Medical real Estate sector is positioned for continued growth.
Sources: ABS, Dept of Health, PHIA (now under APRA).
