Q&A with Pat Kelly, Managing Director Brisbane
Q: Why are investors looking at medical/healthcare assets?
A: “Put simply, increased demand for services within this sector has investors looking for their slice of a growing market. There is no doubt Australia has an ageing population, in fact over the 20 years between 1998 and 2018, the proportion of the population aged over 65 increased from 12.2% to 15.7%1. Looking forward, this group is projected to increase more rapidly over the next decade as baby boomers turn 65. Older people require more frequent check-ups and treatment for health issues and are consequently more likely to use the services of general practitioners, specialist medical practitioners, diagnostic imaging and pathology than their younger peers. The growth in this group and the associated increase in demand for medical/healthcare services provides significant upside and long-term benefits for investors.”
Q: How do medical/healthcare assets differ from other investment classes?
A: “One of the biggest differences in the medical/healthcare sector is the long-term and secure tenant base, with the majority of practitioners being in known locations or located in prime healthcare precincts. They also have quite an established and frequent client base who visit their practice regularly, meaning any change to their location would be quite disruptive to their business. Across the sector, many of the medical/healthcare assets Burgess Rawson has sold in recent years have had tenants who have been in the same location for 10+ years and are usually secured on attractive long-term lease arrangements.”
Q: What are the types of properties within the medical/healthcare sector?
A: The medical/healthcare sector includes a range of entities that primarily provide direct treatment to patients or perform auxiliary services in support of treatment. This can include everything from dental services, specialist medical services, private day hospitals, fertility clinics right through to physiotherapy, pathology, optometry and alternative health services. According to IBISWorld2, there are more than 117,700 businesses within this sector across metro and regional Australia. In another upside for investors, the annual revenue growth of these businesses is expected to increase from 3.6% to 4% each year between 2019 and 2024.
1Australian Demographic Statistics, June 2018 2IBISWorld Industry Report ‘Health Services in Australia’ Report, March 2019