Barwon Investment Partners whitepaper details outlook for Australia’s healthcare property sector

Barwon Investment Partners has released a comprehensive whitepaper on the outlook of the Australian healthcare property sector.

Barwon manages circa $2.2 billion in Australian healthcare property assets and offers three specialised funds: the Barwon Healthcare Property Fund, the Barwon Institutional Healthcare Property Fund and the Barwon Disability Accommodation Fund.

The whitepaper identifies four key trends expected to drive the sector’s growth in Australia:

1. strong government healthcare expenditure
2. Australia’s growing and ageing population
3. technological advances, and
4. inflationary construction costs.

Tom Patrick, Head of Healthcare Property at Barwon Investment Partners, comments, “We view the sector’s strong fundamentals, combined with macro-economic tailwinds, leading to sustained and increased demand for healthcare property over the medium term.

“As we enter the next property cycle, we anticipate the systemic shift away from traditional property sectors such as office and retail, and into alternative property sectors, including the healthcare property sector.”

The healthcare property sector comprises of real estate assets occupied by healthcare operators such as medical centres, private specialist facilities, day surgeries, private hospitals, diagnostic imaging facilities and pathology laboratories.

In recent years, investor demand for healthcare property in Australia has increased. Healthcare properties typically yield resilient income streams. This is as they are generally subject to long term leases with inflation-hedged rent reviews, high credit quality tenants, low vacancy rates and significant tenant fit out co-investment.

The defensive nature of the sector has been especially highlighted in recent times as the world recovers from the COVID-19 pandemic and navigates the current macro-economic environment.

Patrick concludes, “The solid opportunities for growth present 2024 as an attractive entry point for investment into the sector.”