The following is an excerpt from our upcoming Medical property report: Opportunities for investors and practitioners 2017. To secure access to this report prior to public release, simply fill out the form on the right.
Medical property is increasingly being recognised as a superior investment given its greater economic resilience as well as the sector’s strong outlook. The health industry is less contingent on the strength of the economy, unlike most other commercial property markets, as medical services will always be required by the general population. Furthermore, the Australian health sector features robust growth indicators on the back of an ageing population, longer life-expectancy and the overall increase in demand for healthcare services and healthcare employment. This is supported with large government healthcare funding, and all of these factors are leading to an increase in demand for medical-based property.
The Australian Healthcare Index, compiled by the Property Council of Australia and IPD Australia, shows yields for medical property across Australia have been tightening since June 2015 on the back of strong capital growth. This has been largely driven by strong property markets in Sydney and Melbourne, which have undergone a significant property market upswing in recent years. Although we expect this spike in capital growth to return to more historic levels in the near term, the medium and long-term outlook for medical property remains robust making it an attractive proposition for investors and practitioners alike.
What buyers need to know: Site specific demand factors
After identifying the broad locational factors that present the best prospects for medical real estate, investors need to consider the smaller scale, site specific factors that will give the practice the best chance of succeeding. Such factors include accessibility, parking, exposure, council zoning and requirements, location of competitors and location of referral partners. Different types of health care practices will have different site requirements so assessing the target practitioners will be crucial for investors when selecting a site.
When assessing the suitability of a site for the many different types of medical practices, there are two major considerations; the volume of clients the practice would regularly service, and the reliance of the practice on its referral partners. By categorising the different health care services using these two factors, investors and practitioners can better understand exactly what they require from a property so they can then select a site that will succeed.
For a more detailed analysis on demand factors to consider when purchasing medical property, the latest data on medical infrastructure spend and upcoming regulations that may impact investors, fill in the form on the right to secure early access to our in-depth 2017 medical report produced by Momentum Wealth’s research division.