Properties & Pathways

The case for healthcare property investment in Australia


04 April, 2023

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Australians need healthcare more than ever. But premises for the industry are in severe shortage. An ageing population, an increase in health-related issues, and a growing government healthcare focus bolsters the case for healthcare property investment. And these are just some of the reasons why it might make a smart investment for you.

For those investors looking for one of the most relevant commercial real estate investments, with the expectation of tenant demand to skyrocket, you might consider healthcare.

3 reasons healthcare is more relevant than ever

Relevancy is at the heart of good commercial property investment. Solid demand for a tenant like yours needs to be evident not just today but well into the future.

According to real estate research consultants Deep End Services, typical medical provision rates are about one GP per 1,000 residents. Yet some precincts don’t come close to meeting this demand.

There’s a strong case for healthcare property investment in Australia, and that won’t change anytime soon. Here’s why healthcare isn’t just in high demand in 2023 but could be a welcomed addition to your portfolio in the years to come.

1. Ageing population

healthcare property investment australia

Australia’s over-65 population is forecast to increase 3.1 per cent per annum between 2018 and 2028.

Australia is not the young nation it used to be, and it’s only getting older. The population is expected to grow at 1.5 per cent every year between 2018 and 2028, while the over-65 population is forecast to increase 3.1 per cent per annum over the same period.

The pandemic has highlighted the need for high quality healthcare, meaning those baby boomers in the above-65 age bracket are spending more on their health than ever.

2. Increase in Chronic Disease

The Australian Bureau of Statistics (ABS) estimates that around 80 per cent of Australians are living with some form of long-term health conditions. Hard to believe chronic diseases are so prevalent, isn’t it? Well, here’s why…

Alongside an ageing population, we’re also seeing an improvement in the detection of these chronic diseases. And of course, twenty-first century lifestyle factors, from poor dieting and lack of exercise, are contributing to cardiovascular issues, cancer and diabetes for many in our communities.

Australia’s healthcare system, despite its quality in comparison to the rest of the world, is struggling to provide an appropriate level of care for every patient who walks through medical centre or hospital doors. There’s demand for healthcare centres, and its growing – quickly.

3. Increase in preventative care

Medical costs in Australia are on the up. Us Australians rely heavily on the Federal Government to fund healthcare services, and federal healthcare expenses are expected to more than double in the next thirty years (from around $3,000 per person today to approx. $6,600 by 2054, according to the Department of Treasury).

Healthcare demand is an opportunity for property investors

healthcare real estate investment

Healthcare real estate investment is growing in popularity among investors who see it as a relevant opportunity. In 2023, the relevance of healthcare is higher than ever.

We are currently seeing a huge undersupply of medical establishments in Australia. Communities are crying out for ongoing investment in primary care infrastructure across the country, which includes medical centres and other assets, such as aged care facilities.

Property heavyweight JLL agrees:

With people aged 65 and over forecast to make up 18.9 per cent of the population by 2041, the value of this sector of highly specialised buildings – together with new hospitals in the pipeline – will be collectively worth at least $41 billion – JLL’s Australian Healthcare Real Estate Outlook report, 2022

There is an opportunity here for commercial real estate investors, particularly sophisticated investors.

If you’re going to take advantage of healthcare property investment, while demand is relatively young, you might target catchments begging for medically-focused developments or acquisitions, especially if allied health services are offered (those practices involved with prevention of chronic diseases and disorders and establishing nutrition and dietary plans).

It could also be wise to check the population in your target catchment and consider whether there’s prevailing space for more healthcare tenants. If your preferred retail or office asset allows it, you might be on to a winner.

As we start to see a return to normality post-pandemic, healthcare and the premises which house the field’s professionals will only grow in relevance. Want to add muscle to your portfolio with a healthcare property investment? Get in touch.

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