Speaking at the Australian Unity Property Roadshow in Australia, Australian Unity head of portfolio management Ryan Banting said property leases within the healthcare sector typically tend to be double that of other property portfolios, which enables investors to “work with their tenants to achieve mutually desired outcomes”.
Mr Banting said these longer leases also mean “attractive and stable” returns.
“Healthcare just didn’t have the negative capital growth in the GFC period that some of the other property sectors had,” he said.
He said in five years’ time Australian Unity expects about 10,000 people per day will turn 65 in Australia.
This increasing demographic he believes will inevitably increase demand for access to healthcare services.
“It is also important to understand the Australian government is looking to the private sector to assist in the delivery of healthcare services for Australians,” said Mr Banting.
“This was inferred in the most recent federal Budget, where the federal government began to delegate responsibility for the delivery of healthcare much more onerously down to the states.”
Mr Banting said it has been part of the states’ objective “to get the private sector to assist to deliver healthcare services to their constituents in a more meaningful and ongoing way”.
He said Australian Unity is already currently involved in a number of blueprints and conversations with state governments around Australia.
Australian Unity is particularly interested in brownfield developments as opposed to greenfield developments, according to Mr Banting, given the fact they have “no stamp” duty and allow the investors to work with the tenant to “expand their operations”.
“The second aspect is you assist the business to increase its income from a given investment. As a result of that increased income, you get increased rental flow through your portfolio,” he said.
Mr Banting did note, however, there are “high barriers to entry” when it comes to investing in healthcare property.
“It takes a lot of planning approvals to build a hospital, there aren’t that many of them that get built, and when they do get built it takes a long time for those hospitals to trade up to full capacity to become profitable,” he said.
“It’s not like a retail shop that gets opened in the middle of a CBD; when you build a hospital it takes a lot of time for foot traffic to go through, for beds to be occupied and for doctors to appreciate the value the hospital brings them.”
