Healthy Returns: Unlocking Investment Opportunities in Western Australia’s Medical Property Sector

May 2024

Industry knowledge and strategic insight are valuable commodities when it comes to healthcare property investments. Investment success comes from gathering an insider’s understanding of the industry and the factors that influence drivers including demographic and population growth, proximity to tertiary health centres and referral networks, and analysis of the supply of providers within a catchment area. The health sector has demonstrated time and time again that it is resilient to external regional, political and economic influences and cycles. Reduced volatility in the heath sector has always drawn strong interest from investors and financers.

Since the COVID-19 pandemic, there has been a significant uptake in federal and state government funding to the health sector, through multiple programs and policies which underpin the strength and future of this sector. This renewed focus on the importance of the health industry, has resulted in significant private investment to deliver world-class medical infrastructure.

Prospective investors have more choice across the Perth metropolitan area, with existing and emerging medical hubs pushing the sector forward. From factors such as location and transport access, all the way to demographic considerations, businesses must assess the strategic viability of new healthcare ventures.

Here are some ideas for healthcare businesses to consider when investing in property.


Investment opportunities within expanding medical precincts

The increasing demand for healthcare services has led to record investment in hospitals and medical precincts across Perth. Western Australia’s contribution to healthcare in the 2023-2024 State Budget topped $10 billion. Works to major hospitals such as Sir Charles Gairdner, Fiona Stanley and Perth Children’s Hospital set the tone for a state-wide focus on healthcare.

This allocation has demonstrated a clear desire to lift WA’s healthcare capability and capacity, which in turn encourages both local and external investment. The investment in public infrastructure has also increased interest in complementary private healthcare facilities near these precincts, presenting opportunities for ancillary healthcare services around the edges of these updated major metro hospitals. For example, dedicated medical and research hubs like Murdoch Health and Knowledge Precinct provide opportunities for a range of medical services to feature with the support of proximity to hospitals and public transport networks.

And the investment in healthcare infrastructure has come just in time, as WA’s population transitions into a new chapter.


Changing demographics provide new opportunities

WA’s evolving population has quickly escalated demand for health services. It’s true that there are simply more of us than ever before. As of September 2023, WA had the fastest population growth rate of all the Australian state and territories at 3.3 per cent. But there is more to it than just population growth. Western Australians are also getting older. The most recent census data shows that one in five Western Australians are over 60. An ageing population presents problems for a public health system, but it also presents opportunities for those providing specialised services and support as more people transition into higher care needs. Opportunities will present themselves for all aspects of the WA health system from general practitioners, Allied Health (physio, podiatry), pharmacy and psychology, to medical specialists such as surgeons.

These insights are valuable when considering investment to support WA’s evolving health sector and establish healthcare businesses in strategic locations. Investors and owner-occupiers can reap the benefits of moving early, by positioning themselves in growth corridors, new specialised developments, and in established communities where demands for services are growing.

Investment or medical development opportunities in these areas are highly sought after in the current market, and being able to access market knowledge and data is critical to a successful acquisition.


Evolving sector and increased collaboration

Gone are the days of relying purely on your local GP and nearest hospital. Healthcare is evolving from traditional methods, and this is as much true in business and investment as it is in medicines and healthcare services offered. The rise of telehealth and remote services is driving demand for smaller, distributed healthcare facilities.

Between March 2020 to July 2022, more than 118 million telehealth appointments were conducted for 18 million patients, with nearly 100,000 practitioners using telehealth services during this period. This demonstrates how consumers are looking at operators and business models that provide convenience and accessibility. This has prompted a shift towards less formal, community-based healthcare, that has bred a collaborative and community-centric model.

An increase in mixed-use developments that provide health-related services to communities close to retail and commercial centres are also transforming how we think about health. This transition should provide property investors with confidence. Not only are services becoming more accessible and integrated into regular life, but there has been a massive push to lift the skill and capability of WA’s healthcare system.

In February 2024, WA Health Minister Amber-Jade Sanderson went on a global recruiting drive, identifying India as a source to help deliver 5000 new healthcare workers over the next decade. This strategic push has demonstrated locally, nationally and globally that WA has a strategic focus on healthcare. Investors should be doing the same.

Due to the critical role that the health industry plays in supporting WA’s growing and ageing population, combined with the underpinning of funding provided by state and federal governments, the health industry will continue to perform strongly over the short to medium term. The WA Health Market presents a wide range of medical and related opportunities to investors and owner occupiers.

While the landscape is ripe with potential, businesses must evaluate the strategic viability of new healthcare ventures. The experienced team at Sterling Property have decades of experience helping clients to find the right property for their business needs.

View our latest available commercial properties and recent sales, or get in touch with us today to discuss your commercial property needs for your medical or consulting business.

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