Financial intelligence for Asia's healthcare markets
Remember me:

Analysis: Healthcare emerges as major asset class in Perth

On the back of an ageing population, strong employment growth and the flow of private investment, medical and health care property will emerge as a major asset class in Western Australian’s commercial property markets according to new analysis by independent West Australian commercial property information and research firm, Y Research.

The analysis, undertaken as part of Y Research principal Damian Stone’s address to the Australian Property Institute State Conference in July, showed that Perth hospitals had a strong impact on surrounding property markets. Using information for its office market databases, Y Research determined the amount of office space occupied by medical users in suburbs surrounding Perth’s hospitals. This was then rated against the number of hospital beds in Perth’s major hospitals. This analysis determined each suburb’s “Medical Multiplier Effect” – a measure developed to rate the impact of each hospital on the surrounding suburbs’ office markets.

The measure showed that, on average for each of the 5,316 hospital beds in Perth’s major hospitals, approximately 19.7 sq m of office space was occupied by medical space users in surrounding suburbs. The largest impact is in the Perth CBD and West Perth where approximately 55.6 sq m of office space is occupied by medical users. Nedlands and Fremantle were the next strongest suburbs, each recording around 24.1 sq m of space occupied by medical users per hospital bed.

The impact of hospitals on office demand was weakest in Joondalup, where approximately just 5.6 sq m of office space was occupied by medical space users. Claremont, approximately 9.1 sq m of office space occupied, was the only other suburb to record less than 10 sq m of medical led demand.

Commenting on the analysis, Stone said, “The health care sector is an important part of the West Australian economy and, increasingly in the future, an important part of Western Australia’s commercial property markets”. Over the last decade the government has spent over A$7 billion (US$5.6 billion) building new hospitals and expanding existing facilities. The health department receives the most funding in the state budget (more than A$5 billion this year). As a result of this investment, health care now employs more West Australians than any other industry – 166,800 people or 11.9% of West Australians. In comparison, mining employs just 6.9% of West Australians.

He points out that for property, nationally significant investment is flowing into the healthcare sector (hospitals/medical centres), which is estimated to be worth over A$120 billion dollars. A-REIT Dexus just announced a A$750 million heath care property fund; superfund Australian Unity raised more than A$170 million in two days for its health care property fund; and in Perth, St John of God recently announced plans to divest a A$400 million portfolio of properties under a sale and lease back arrangement. “Health care is an attractive sector for investors due to strong returns and low volatility compared to office and retail property. Nationally health care property delivered an annual return over 20%. As a result of competition for limited quality assets, yields are tightening to levels comparable to quality office and retail assets,” said Stone.

The health sector’s strong performance is underpinned by the rental premium of medical centres compared to alternative options for medical tenants – office, retail and former residential properties. Current asking rents for new medical centres on hospital campuses are comparable to premium grade CBD office buildings. On average, asking rents for high quality medical centres are 88% higher than office and retail properties advertised for medical use and 50.7% higher than former residential properties advertised for medical use.

“Given the expected demand for medical facilities as the population ages, and with strong investment from the government, private sector and property industry, medical property has the potential to be the prescription for the ailments of Western Australia’s commercial property markets in the years ahead,” said Stone.

Posted on: 31/07/2017 UTC+08:00


First REIT, the SGX healthcare real estate investment trust owned by Indonesia’s Lippo Group, has reported a 0.9% rise in distribution per unit (DPU) of S$0.0214 for the third quarter of the year.
Metlifecare, New Zealand’s second-largest listed retirement village operator, plans to spend NZ$240 million (US$167.2 million) to develop a waterfront retirement village at Scott Point, in the Auckland suburb of Hobsonville.
Thonburi Healthcare Group, the country's third largest hospital operator, has inked an MoU with Korea’s Green Cross MS and Green Cross Laboratories.
At its annual general meeting at the end of last week, Gordon Ballantyne, new chief executive of Healthscope, Australia’s second largest private healthcare operator, said that he expected current private hospital market conditions to continue in the short term.
Hong Kong-listed healthcare company China Wah Yan Healthcare plans to consolidate its shares. The move has been pushed onto the company to comply with trading requirements.
Monash IVF Group, Australia’s second largest fertility treatment provider, has appointed David Morris as the CEO and managing director effective from 13 November. After eight years, James Thiedeman stepped down in May.
SGX-listed Singapore Medical Group, a multi-disciplinary specialist healthcare services provider has announced its latest acquisition.
Malaysia's Top Glove is on the acquisition trail. The world’s largest rubber glove manufacture has signed an MoU to buy all the ordinary shares of Eastern Press for M$47.25 million (US$11.18 million) in cash. Eastern Press is principally engaged as a printer and supplier of packaging material. It is also the major supplier of packaging material to Top Glove's subsidiaries in Malaysia.


Is there a case to be made for a merger between Metlifecare and Summerset Group, New Zealand’s second and third-largest listed retirement village operators? First NZ Capital reckons so and analyst Arie Dekker makes an eloquent case for it in a new research note.
Stephenson Harwood’s Tom Platts, Ben Hickson and Su Wai Phyo report on key changes implemented by the Myanmar government to facilitate much-needed foreign investment in the country’s healthcare sector.
In the lead-up to the UN’s International Day of the Older Persons on 1 October, Jason Sadler, president, Cigna International Markets, looks at the impact of an aging population on the world’s healthcare system and the role that digital technology will play in meeting this new challenge.
By 2042 there will be more over-65s in Asia than the populations of the Eurozone and North America combined. We look at the business opportunities this creates.
Albert Wong argues that biomedical technology should not be ignored and explains how the Hong Kong Science and Technology Parks Corporation can support it.
Jacob Pope explains why medical tourism remains one of the region’s most significant industries.
APACMed’s Fredrik Nyberg looks at how local and multinational IVD companies are developing novel solutions for Asia’s unique needs.
It is perhaps a curious line in the sand to draw, but the new hospital in Dunedin, the second-largest city in the South Island of New Zealand, is gearing up to be a significant battle in the use of private-public partnership funding in the APAC region.




Hedge Fund Focus

HealthInvestor Asia twitter feed
HIA Indices