Real Estate Opportunities in Healthcare

The Australian Healthcare real estate sector offers attractive set of opportunities, particularly in the growing health precincts space. 

• Australian healthcare spend was ~$260bn in 2023. CBRE estimate growth of 3.5% p.a. over the next 5 years, outpacing GDP forecasts due to ageing population and increasing burden of disease.
• Hospital share of healthcare expenditure will also grow from 38% to 41%. Private hospitals consistently deliver 40% of activity.
• Historically, there have only been a few opportunities to build scale through private hospital real estate trades. 
• Public hospital developments seed opportunities for larger scale public-private precincts, an opportunity for institutional investment. Precincts and clusters have proven to drive rental and land demand/values – given they encompass healthcare delivery, research, education and accommodation.
• We view long WALE, CPI-linked rent escalation, government and PHI backing across the sector, triple net leases and barriers for occupier re-location as favourable factors supporting tight cap rates – which we see as attractive on a relative basis to the traditional asset classes (like for like, effective basis)