Growth in healthcare related sectors, including dental and veterinary services, has outpaced inflation over the past five years.
Burgess Rawson director Ingrid Filmer says this trend makes clinics coming onto the market among the most rewarding of commercial property investments at the moment.
Another major reason she says properties leased as medical centres, vet clinics, dental and orthodontists are “rock solid investments” is because these businesses are immune to digital disruption.
“For all their technological advances, computers can’t fill a tooth, treat your dog or give you a health check-up,” she said.
“Many commercial property classes are experiencing disruption from technology overtaking certain industries.
“But health services will always require physical spaces which, which is why clinics are now at the top of many investors’ lists.
“Vets and medical centres can’t be digitised and, importantly offer an essential service, rather than a luxury.
“This translates into a relatively risk-free tenancy when it comes to investing.
“Investing in bricks-and-mortar properties rented to health service tenants means that leases tend to be secure and long.
“Such tenants have spent significant funds on building compliant, capital intensive fit-outs.
“Normally, they acquire growing clientele bases as people familiarise themselves with the practice, often for generations.”
At Burgess Rawson’s next portfolio auction on May 15, three such opportunities will go under the hammer.
A veterinary clinic in Cranbourne North will also be auctioned.
It comes with a five-year lease and two five-year options.
“This clinic currently returns almost $60,000 in annual rent, making it an excellent entry-level investment,” Ms Filmer said.
The latest research from IBISWorld reveals that the increasing uptake of private health and pet insurance has boosted revenues for dental and veterinary practices, respectively.
The firm estimates that revenue for the nation’s 15,670 dental clinics is $10.8 billion, or an average of $700,000 per practice.
Revenue figures for the veterinary sector are even more impressive, with 3200 vet clinics raking in an average $1.25 million each as part of a $4 billion industry.
Ms Filmer added: “With the looming federal election, there is always a cource of apprehension for some investors as they wait to learn whether there will be a change in government and investment rules.
“Investors should look at buying before the election to avoid potential policies such as a curb on negative gearing and a halving of the capital gains tax breaks from 50 per cent to 25 per cent.”
The Burgess Rawson Portfolio Auction starts at 11AM on May 15 at the Crown Complex, Melbourne.
To find out more about the properties in our portfolio, and how we can help you with sales, leasing and property management services, please contact us.
Originally published in the Herald Sun