Medical property combines long leases, essential tenants and demand that continues to grow every year. The challenge is access: quality leased assets rarely come to market, and when they do, competition is strong.
With Western Australia’s population growing faster than any other state, demand for medical services continue to build in a market that is already under pressure due to a well published shortage of GPs and specialist doctors. Medical assets continue to be highly sought after by investors and owner occupiers alike.
Sterling Property Senior Partner Jake Wallman and Partner Simon Brady say owner-occupiers are setting the pace, with practitioners and operators competing for well-located, medical centre suitable premises before they reach investors. For owners weighing a sale and investors considering medical for the first time, here is what they are seeing in the market.
Occupiers are setting the pace
When Sterling Property launched 179 Scarborough Beach Road, Doubleview to market, eight owner occupiers groups presented offers. The vacant medical centre on an 879sqm corner site sold for $2,450,000 + GST.
“Medical owner-occupiers are actively chasing sites so they can own their freehold outright rather than lease, medical groups look at property through the lends of this being their practice location for the next 15 -20 years” says Mr Brady. “Doubleview ticked most boxes; corner exposure, mixed-use zoning and a functioning medical fitout ready to go. We’re still working with seven qualified buyers who missed out.”
Doctors are well supported by the financial system allowing them to borrow money to facilitate establishing the purchase of a property and working capital to establish a new medical centre in a strong location.
In Parkwood, a 288sqm medical-ready premises next to Riverton Forum sold to an occupier in three weeks. Mr Wallman says everything lined up for an owner-occupier.
“The price point, recent improvements and the zoning potential all worked in its favour. It was a great result for this type of property and campaign.”
Investment stock is coming from two places
- Consolidation. National groups are acquiring independent practices, and their leases carry a stronger covenant. In October, the ACCC cleared Bupa’s acquisition of Partnered Health, which operates seven WA clinics.
- Sale and leaseback. Doctors looking to expand their foot print or retire look to sell their free hold property and lease it back, releasing capital while the practice keeps trading.
The demand is structural
With a forever aging population patients continue to require medical support from the health system regardless of the broader macro-economic factors such as rising interest rates, so demand for medical services continues to grow.
Western Australia’s population grew 2.1% in the year to March 2026, the fastest of any state. Growth is strongest in Perth’s outer suburbs, with Alkimos–Eglinton up 13% in a single year and Baldivis–North up 11%.
WA also has the lowest GP density of any state, with 97 full-time GPs per 100,000 people against 113 nationally.
What buyers are underwriting
Convivence a strong driver . A medical asset is only as strong as the community it services and the ease by which patients can access clinics. Medical Groups continue to focus on locations that provide strong exposure to passing traffic, mixed with colocation to amenity such as shopping centres and other medical related businesses (pharmacy, radiology, allied health).
Mr Brady sees both types of catchment working in Perth.
“In growth corridors like Alkimos, Piara Waters and Baldivis, families are arriving years before the services catch up, so a well-located clinic is critical to service the growing community and population” .
“More established suburbs like Claremont, Scarborough or Fremantle offer something completely different, where the older demographic tend to be well serviced by established groups and practices.”
Buyers are paying for covenant. The medical market is highly fragmented with National and listed operators such as Sonic Healthcare and Bupa considered the strongest of covenant with a spectrum of medical groups, lease structures and tenants including sole practitioners.
Mr Wallman says buyers are looking closely at who stands behind and the security of the lease, and the strongest covenants are reflected in the price.
Lease length is doing the heavy lifting. New purpose-built centres often secure GP operators on leases of 10 years or more. In Anketell this year, the GP signed a 12-year lease with a seven-year option.
Established practices and allied health tenants more commonly sign three to five years with options.
Most medical leases are net, so the tenant pays most outgoings and the rent received is close to what the owner keeps.
Fitouts are costly and patients are loyal to a location, so most practices renew rather than relocate.
Mr Brady says the Anketell deal shows how committed operators are to new sites.
“When a GP signs a 12-year lease with a seven-year option, they’re investing heavily in the location and the future success of their business /practice within that property, emphasised by their heavy investment in their fit out.
“Once established and trading they’re not planning to move. That’s the kind of security and commitment investors are looking for.”
Unit 9, 178–184 Cambridge Street, Wembley sold for $1,850,000 at a 6.03% yield*. A long-term lease to Envision Medical Imaging and a position directly opposite St John of God Subiaco drew strong investor interest.
Where medical is trading
Indicative Perth yields for medical assets are below, with quality assets trading firmer.
| Tenant and asset type | Indicative net yield |
| ASX-listed or national operator, net lease | 5.50–6.25% |
| Established group practice, suburban centre | 6.00–7.00% |
| Standalone GP or smaller mixed-use | 6.50–7.50% |
Covenant drives the sharpest results. In August, a radiology clinic in Eaton, near Bunbury, sold for $1.38 million at a net yield of 5.2%. The tenant, Apex Radiology, is owned by ASX-listed Integral Diagnostics, and pays every outgoing, including land tax.
Prime Perth industrial and childcare trade at 6.0–6.5% and residential returns 4.0% gross, so medical holds its own once yields are compared net.
Below $10 million, most buyers are self-managed super funds (SMSFs) and private investors. Above that, syndicates and healthcare funds dominate.
Sterling’s Managing Director Brian Neo’s sale of a 175sqm imaging suite at 9/178–184 Cambridge Street, Wembley shows a typical entry point – $1.85 million at a 6.0% yield, leased to Envision Medical Imaging until 2031 with fixed annual rent increases of 2.5%.
Access remains the challenge
For buyers, getting hold of quality medical property will stay the hard part. Demand will keep building with population growth and an ageing community, while new investment stock will keep coming mainly through consolidation and sale and leaseback.
Mr Wallman says the market is maturing. “National groups buying independent practices are bringing stronger covenants to market, and that’s lifting the quality of what investors can buy. But good assets are still scarce, and those with long leases in the right catchment are keenly contested.”
“The buyer pool runs deep, from owner-occupiers through to SMSFs and private investors,” Mr Brady adds. “Owners of well-located medical assets are in a strong position right now.”
For owners, buyers are already in the market and ready to compete. The question is no longer whether there is demand, but whether your asset is being put in front of it.
For private investors making their first move into commercial property, Sterling Property sees a well-located suburban medical centre with several practitioners as one of the strongest options available, provided the catchment, covenant and lease stack up.
The best opportunities rarely reach the open market, so the investors already in the conversation are the first to see what’s coming.
To discuss a medical investment or a confidential appraisal, contact Simon Brady or Jake Wallman at Sterling Property.
