South Australia emerges as a national force in medical property investment
South Australia is emerging as one of the strongest medical property markets in the country, with new data from Cushman & Wakefield revealing that the state is outperforming other larger states across the country.
In just six months to November, South Australia recorded eight publicly traded medical-grade leased investments, which matches Western Australia’s tally but delivers more than three times the floorspace. In total, 8,500 square metres of medical real estate changed hands, achieving a median cap rate of 5.95 per cent.
According to Jack Dascombe, senior executive of investment sales at Cushman & Wakefield, the momentum has been building for some time.
“South Australia is an underrated player in the market of medical, health and life science assets,” he says.
“We foresee strong consumer demand for both general and specialised clinics, and consequently robust competition among buyers for assets underpinned by these operators.”
Larger facilities signal a bright future
Scale is one of South Australia’s greatest advantages, with the median facility size sold this year of 981 square metres, which is more than double that of NSW (410 square metres) and much bigger than in Victoria (211 square metres), Western Australia (152 square metres) and even Queensland (245 square metres). In fact, the state’s median facility size has exploded from 629 square metres over the past 18 months, reflecting both the rising sophistication of healthcare facilities and investor attraction to larger buildings.
That jump in scale is translating directly into value, with the state achieving a median sale price of just under $6.1 million, which is significantly higher than that of all other states.
The factors fuelling demand
A combination of affordability, an ageing population and a relative shortage of medical facilities has intensified competition for South Australia’s medical buildings. Recent major government spending, including the state government’s $1.9 billion injection into the health system, the $3.2 billion redevelopment of the Women’s & Children’s Hospital, and Flinders University’s $300 million HealthCARE Centre, is amplifying confidence in the sector.
Dascombe also explains that the South Australian public is seeking medical advice at a steadily increasing rate, which demonstrates the need for more facilities.
“Visits to GPs, dentists and other health professionals are up year-on-year, according to NAB’s latest Health Insights Report. Meanwhile, South Australia now has the highest percentage of NDIS participants relative to its population, representing 8.8 per cent of the nation’s total which further strengthens demand for specialist medical facilities,” he says.
Location, location, location
Proximity to everyday conveniences is proving to be a major driver behind buyer behaviour.
“Sixty per cent of people surveyed said proximity was the most important factor when choosing a health professional,” Dascombe says.
“That’s reflected in the market: 55 per cent of SA’s medical investment sales this year were within one minute’s drive of a major shopping centre, and the rest within five.”
Interstate capital is also flowing in, with nearly 40 per cent of SA’s medical investments over $5 million in the past year being sold to buyers outside the state.
“South Australia continues to deliver quality over quantity. With robust fundamentals, government backing and growing demand for health services, medical-grade property in SA stands strong nationwide and is a strategic play more than ever,” Dascombe says.
Here are some current medical facilities on the buy and lease market available to investors and operators…
16 Druid Avenue, Stirling, SA
Situated in the heart of the Adelaide Hills, this prominent modern building, which is currently for sale, offers strong visibility in one of the region’s most affluent catchments.
14 Waterloo Street, Glenelg, SA
Moments from the beach and Jetty Road, this tightly held Glenelg holding gives buyers a rare coastal medical or professional consulting opportunity within a beautiful Edwardian-era building.
7 Valetta Road, Kidman Park, SA
Positioned between the CBD and the coast, this large high-exposure site encompassing 4484 square metres is suited to medical, dental or specialist health tenants seeking strong access to patients.
42 Nelson Street, Stepney, SA
Positioned within one of Adelaide’s most tightly held inner-east precincts, 42 Nelson Street offers premium fit-out potential and excellent visibility. It’s seeking a new tenant who needs four consulting rooms and a reception area.
47 Fullarton Road, Kent Town, SA
This adaptable healthcare or consulting space provides eight consulting rooms, five car parks and strong accessibility for patients. With flexible floor plans and proximity to the CBD, the property suits a range of uses including medical/allied health, specialists or professional services.
