Private healthcare operators rise to the challenge of Australia's growing and ageing population
May 06, 2022
"In the 20 years I have been working in healthcare real estate I have never seen the healthcare operators as busy as they are today. Our well located medical facilities are all experiencing unprecedented demand for services."
Key Market Themes
The growing demand for healthcare services is underpinned by:
Ageing population – Australia's population growth rate is 2x that of advanced economies. The ageing population is forecast to grow from 15% to 18% by 2027
Strong growth of public and private healthcare expenditure – Forecast to increase by 3.3% in 2021-22 to $219.1 billion
Technological advancements – Modern advancements in science and technology have assisted in improving health and life expectancy and increased public awareness of proactive healthcare options
Public Healthcare System Under Stress
As a result of these trendsthe Australian public healthcare system is under increasing stress:
National medianwait time for elective surgery has increased50% over the last 15 years2
Increasing dependencyof public patients on private hospitals; public patient demand for private hospitals has grown at9.8% p.a. over the last 5 years2
Implications for Healthcare Real Estate
These stresses on the public healthcare system are resulting in growing demand by private healthcare operators for high quality healthcare real estate. The Elanor Healthcare Real Estate Fund's property assets include multi-tenanted medical centres, day surgeries and specialised facilities with a focus on outpatient services. These healthcare providers have a significant investment in their facilities and location. The Fund's properties are well located in highly desirable catchments in close proximity to major health infrastructure, including public and private hospitals.
The Elanor Healthcare Real Estate Fund directly benefits from the significantly growing demand for healthcare services and is well positioned to provide strong income security and capital growth.
Source: 1. ABS Life Tables and Centre for Population, Intergenerational Report 2021. 2. AIHW, Admitted Patient Care 2019-20.
In Australia, the unemployment rate unexpectedly fell to 3.7 per cent in February, as 116,000 got new jobs. This rate is around where it had been six months ago, and close to the 50 year lows (3.4 per cent) seen post-pandemic. Commentators suggested that this resilience in the labour market could delay reductions in the official interest rate.
In market news, the Australian Stock Exchange hit a record intraday high on Friday of 7853.1. It retreated significantly on Monday, following losses on US indices, but the outcome was still reported as a milestone moment.