Simple guide to Social Infrastructure investments

Social Infrastructure has become one of the most prolific terms to come out of the investment landscape in recent times. Despite being a rapidly evolving term that’s been widely embraced, it still has no universally accepted list of assets that fall within its category. 

That’s where CBRE wants to change that. As part of an expert team specialising in the sales and leasing of large-scale Social Infrastructure assets, we’ve devised a simple guide to help provide clarity on the intricacies of these assets so that you can make smarter investment choices for your future.  

What are Social Infrastructure assets   

Social Infrastructure in Australia encompasses assets in:

1. Education (Childcare, University’s, TAFE’s, Primary & Secondary Schools)
2. Aged Care 
3. Specialist Disability Accommodation (SDA) 
4. Emergency Services / Government Tenancies (Ambulance, Police Stations & Law Courts)
5. Life Sciences  

Why Healthcare doesn’t qualify 

The most immediate questions we get when presenting this list is: ‘What about Healthcare?’ or ‘What’s the difference between Social Infrastructure and Healthcare?’ 

Healthcare is now a highly established asset class which has officially entered mainstream investment. With multiple institutional funds and private syndicates featuring a dedicated focus toward these assets, it is clear that the market segment is considered mainstream and should stand alone as a core property category alongside the likes of Office, Industrial and Retail. 

Healthcare assets today can include: 

• Private hospitals 
• Public hospitals 
• Rehabilitation and Metal health hospitals  
• Super Medical Centres 
• GP and Allied health offerings 

Further testament to Healthcare’s transition into mainstream investment territory can be seen in some of the recent talks featuring CBRE experts and some of Australia’s most prominent names in the Healthcare investment sector. Their insights reveal why Healthcare assets have been frontrunners of the commercial property market for years and will only continue to attract more investors as time goes by.     




CBRE recently conducted further analysis into the hidden potential of healthcare assets. 

Breaking down Social Infrastructure assets  

Given the range of Social Infrastructure assets available to potential investors, a clear definition of each type is crucial in helping to determine the most suitable option.  

Education

In education, most transactional activity occurs across the childcare sector which plays an important economic and social role in Australia.  

Economically, it supports workforce participation for many parents, with the sector itself providing employment opportunities, education and training. The Government’s support of Childcare as an essential service has changed how the wider community views childcare and the early education sector. It is now expected that families should be able to access quality early learning, enabling and encouraging greater workforce participation and be of assistance to low and middle-income families. 

Based on CBRE’s internal market monitor and expert insights, investment sales activity across the early learning sector peaked in 2021 with record sales volumes and cap rates achieved. Despite a minor correction in 2022, buyer appetite for these freehold investments remains positive and present.  

From a leasing perspective, operator demand continues to thrive with the CBRE team leasing a record number of centers in 2022, a level we expect to comfortably be surpassed in 2023 as operators continue to build scale to cater to consistently strong occupancy rates nationally.  

Aged Care 

Australia’s Aged Care sector has long been one of the nation’s most polarising market segments and remains this way even till this day. Market activity has been consistent with both Going-Concern (operating business) transactions and Vacant Possessions sales.  

Over the past 36 months, Going-Concern transaction volume has been subdued while numerous vacant Aged Care homes have been transacted and the trajectory of opportunities is only heading north. Depending upon the age, quality and maintenance history of the improvements, many of these opportunities have transacted at below replacement cost. 

Aged Care construction costs are substantial which creates an incredibly high barrier for developments to enter the sector. From a developer’s perspective, projects are rarely feasible which is why an overwhelming majority of the country’s Residential Aged Care Facility (RACF) homes are owner occupied. 

From CBRE’s engagements with operators developing Aged Care facilities as well as architects in the segment, national average construction costs can range anywhere from $300,000 per bed and above (subject to build quality). Development compliance for these homes is strict and all must be built to a Class 9c standard. In addition, under residential planning controls. 

Specialist Disability Accommodation  

Specialist Disability Accommodation (SDA) consists of accommodation for members of the community with high support needs. More specifically, SDA housing is available to those who have been assessed under the NDIS framework as requiring a specialist housing solution.  

All SDA accommodation must recognise the importance of outdoor areas and be designed to align with the surrounding community. SDA projects must also meet the criteria outlined within NDIS SDA Design standards which can be found here for those wanting to conduct further due diligence. 

There are four categories of SDA design which investors should be across: 

• Improved liability  
• Fully accessible  
• High physical support  
• Robust  

Development enquiry ranges from apartment style projects comprising of a mixture of traditional residential accommodation or healthcare usage and SDA apartments, to low rise villa/townhouse style projects. These smaller scale projects can feature anywhere from 2 to 8 homes while the apartment style can feature up to 16 units. 

As market education continues to increase, so too does investor interest. CBRE’s internal market monitor and expert insights indicate that while several private investors are making acquisitions in the sub $10,000,000 market, increased institutional investment is also occurring. 

Emergency Services / Government Tenancies  

Emergency services are often categorised as the most pure ‘essential service’ grade property investments on offer. As a result, they are always highly sought after by investors across private and institutional markets. This strong demand is reflected in CBRE’s sale and marketing of two Victorian police stations in mid-2022. Sales volumes as a result remain historically low with many of these opportunities also being Government owned and not coming to market until the end of life. 

These constraints mean that there are insufficient datasets to provide compelling insights into transactional activity within the sector. 

Life Sciences  

The Life Sciences industry is one of Australia’s largest growth sectors. The term covers real estate specifically designed and built to facilitate the advancement of medicine and healthcare. Life sciences assets can fall under industries including:  

• Biotechnology 
• Pharmaceuticals 
• Medical device companies 
• Genomics 

The thriving asset class also contributes to increasing occupier and investment activity within commercial property. This is due to global pharmaceutical companies expanding their production capabilities in Australia through R&D, manufacturing and distribution. 

An investment in society’s health 

There’s no doubt that these markets are all highly attractive investment propositions with growing demand across the region right now. CBRE is proud to help broaden the appeal of Social Infrastructure assets so that it becomes universally recognised as a standout performer. Given the surge in demand for these types of assets over the past few years, it should only be a matter of time before Social Infrastructure follows in the footsteps of Healthcare into the mainstream investment class.    

Begin your journey in Social Infrastructure 

CBRE is one of Australia’s most trusted names amongst Life Sciences businesses. We deliver results in this highly regulated sector through our deep knowledge and experience in the space, which is further reinforced by a dedicated team of professionals strategically located throughout the region. This enables us to leverage the knowledge of both the capital and operational facets of the industry to drive unparalleled results.