Emanuel Datt
The Intergenerational Report 2026 projects that the number of Australians aged over 85 will triple to 1.9 million by 2065–66. Lack of infrastructure is one of the aged care sector’s biggest challenges, according to Datt Capital chief investment officer Emanuel Datt.
“To accommodate our ageing population, Australia needs a substantial expansion in residential aged care. As the country gets older, spending on healthcare and aged care is accelerating. However with demand rising at an increased pace, places in aged care accommodation are expected to be in short supply,” Datt says.
The residential aged care sector continues to face rising demand, financial pressure and structural change. According to KPMG[1], the number of people in permanent residential aged care rose 3.4 per cent in FY25 compared with the previous year.
Ageing Australia[2] estimates the country needs about 10,000 additional residential aged care beds each year to meet demand. Independent analysis by Grant Thornton puts the annual requirement at 6,000 to 11,000 beds. Yet net supply grew by only about 800 beds in FY25.
Aged care providers’ financial performance also improved significantly in FY25, with total income rising 28.9 per cent, according to KPMG. Revenue per resident per day grew faster than the matching rise in expenses, and this drove the improvement.
“We have seen renewed interest in this sector from an investment perspective,” Datt says.
KPMG’s FY25 analysis found that Opal, Bolton Clarke, Estia and Regis kept their positions as market leaders in residential aged care. A Stonepeak-led consortium will acquire a majority stake in residential aged care operator Estia Health from Bain Capital for approximately $2.5 billion in a private market transaction.
“Investors such as Stonepeak regard aged care as an essential service, akin to infrastructure, that provides a regular income stream,” Datt says. “Regis, which is similar in size to Estia, is one of the few ways to invest in this sector on the ASX.
“Most companies do not like high interest rates, but Regis Healthcare, one of Australia’s leading aged care providers, is among the few that benefit from them.”
Occupancy across Regis’s mature homes was 96 per cent in FY26, up from 95.6 per cent the previous year.
“Investing in aged care assets carries risks, mainly connected with government funding and the housing market. But the main source of return runs counter to the usual impact of interest rates on share prices,” Datt adds.
“Regis earns more from new residents when rates rise, and the deposits it holds become more valuable. A long-term shortage of beds supports demand. Private buyers have also paid prices for similar assets that are comparable with those paid for infrastructure projects.”
———