General practitioners working out of new medical facilities near Perth’s hospitals could be paying rent as high as those found in premium grade office blocks in the CBD, according to new analysis by Y Research, a WA property information and research company.
Y Research examined medical property as an emerging class in Perth’s property market, and found strong growth in both demand and price for buildings that house medical facilities across the capital, especially if the buildings were close to hospitals.
Western Australia’s ageing population, robust employment growth, and flow of private investment towards new care facilities is turning medical into a major asset class, according to Damian Stone, Y Research’s principal and chief problem solver.
“The health sector's strong performance is underpinned by the rental premium of medical centres compared to alternative options for medical tenants – office, retail and former residential properties,” Stone said. “Current asking rents for new medical centres on hospital campuses are comparable to premium grade CBD office buildings,”
“On average, asking rents for high quality medical centres are 88 per cent higher than office and retail properties advertised for medical use, and 50.7 per cent higher than former residential properties advertised for medical use,” he added.
Given the anticipated surge in demand for medical facilities as the population ages, and with strong investment from the government, private sector, and property industry, medical property has the potential to be the “prescription for the ailments of Western Australia’s commercial property markets in the years ahead,” according to Stone.
The McGowan government has committed to building a number of “medihotels” in Perth, which would provide accommodation support for patients not ready to be discharged, but who no longer need a hospital bed.
The tender to build the first medihotel facility was won by the Fini Group, who are due to start work in 2018 and finish around 2021. The project will include apartments, an aged care facility, and a medical clinic adjacent to Fiona Stanley Hospital and St John of God private hospital.
There are more healthcare facilities on the way. “Nationally significant investment is flowing into the healthcare sector, which is estimated to be worth over $120 billion,” Stone said.
Healthcare in an attractive sector for investors due to strong growth and low volatility compared to retail and office property. “Nationally, health care property delivered an annual return over 20 per cent. As a result of competition for limited quality assets, yields are tightening to levels comparable to quality office and retail assets,” Stone said.
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