Whether to strengthen your referral network, increase your passive income or invest in a growth asset, perhaps you, like many other medical professionals, are seeking to establish your own medical centre.

One question which arises during the property purchase is whether to refurbish an older medical centre or develop a new centre.

The right strategy for each practitioner will depend on a variety of factors. Here are some issues to consider:

Zoning and council approvals

While many properties have medical rooms as a permissible or acceptable use under the local council’s Town Planning Scheme, the application process to install a medical business into a specific property can be long and expensive. This is compounded by the changing standards imposed by councils (such as parking and access requirements), which might limit the plot ratio of a new building. By contrast, when a property already has approval for medical use, this approval remains in place after the property is sold. This allows you to move ahead with refurbishments more quickly and avoid unexpected changes to requirements at the property.

What’s more cost effective – refurbishment or rebuilding?

Many investors assume that refurbishing will always be cheaper; however this is not always the case. Builders often charge a premium when they are working around an existing structure, especially when they are making structural changes. In addition to this, if the current building features don’t satisfy tenant demand, then a cheaper refurbishment could ultimately cost you in reduced rental income over the long term.

Some centres are more suited to refurbishment, either due to their current layout, zoning, location or character – so rushing to redevelop is not always the right strategy either.

It’s important to undertake a careful feasibility of both options before proceeding – factoring both the cost and projected income of both project outcomes.

Inheriting a client base…or a bad reputation?

Refurbishing an existing centre allows you to take advantage of existing customer awareness, foot traffic and visibility. On the flipside, it can also mean you inherit any negative reputation or stigma associated with the existing centre. If this is the case, make sure you factor this in to the purchase price you pay, and allow funds in your budget to support the marketing and rebranding of the new centre.

The WA property market offers some excellent opportunities for practitioners who are seeking to establish their own medical centre. Careful research and thorough due diligence are essential for medical practitioners to ensure the right strategy and a successful outcome.

For recent case studies or to discuss which strategy might be right for you, just contact us.