VIC MARKET OVERVIEW
THE PROPERTY DEVELOPMENT REVIEW
VICTORIA
Mark Stafford - Senior Executive – Healthcare & Life Sciences Capital Markets JLL Melbourne
Thank-you for the opportunity to share your insights as part of The Property Development Review publication - what are the key trends occurring across alternative asset classes (healthcare, child care, student accommodation, self-storage, co-living or life sciences) so far in 2024. The healthcare, child care, retirement living, and life science sectors demonstrating resilience and growth amidst market challenges. Despite certain operational complexities within the healthcare market, there is a significant and ongoing demand from other key stakeholders, including investors, developers, and owner-occupiers, across a broad range of price points. Compared to the healthcare sector, the child care market is facing relatively fewer operational challenges, enabling developers and operators to expand their portfolios. In the first half of 2024, the national child care sector witnessed transactions totalling $265,246,700, with an average yield of 5.63%. Interestingly, despite 10 fewer transactions being recorded compared to 2023, the total sale volumes increased by $16,736,500, with the average price point jumping to more than $6,600,000. The current off-market sales process of a national portfolio of aged care and retirement village assets, undertaken by the JLL team, has highlighted the depth of demand and projected growth for the sector. The depth of bidding generated during this process serves as an indicative indicator of the growing demand of opportunities and the continued expansion of operators to cater to Australia’s ageing population. Reflecting on the deals that you’ve transacted in the first half of the year, how are you observing market sentiment amongst commercial property investors & do you anticipate any material shift in sentiment or activity over the course of the next six months. The sentiment surrounding alternative asset classes, particularly the healthcare market, has remained positive in the first half of 2024. This is evidenced by notable transactions facilitated by JLL, such as the sale of I-Med Bundoora and Primary Care Centre Warrnambool. I-Med Bundoora, a leased investment that had not been on the market for 32 years and had only 2.2 years remaining on the lease, attracted significant interest. Despite the short lease profile, the JLL team generated 8 individual offers. The property was eventually sold to a local investor on an unconditional 60-day settlement, achieving a return of 5.14%. Similarly, the sale of the Primary Care Centre in Warrnambool showcased the demand for high-quality healthcare facilities from active operators. The property was sold to a locally based owner-occupier who required an upgrade for their existing facility, which they had initially planned to redevelop. The JLL team highlighted both the benefits of cost and time of the acquisition of this facility, which motivated the purchaser and saw the property transact on a 30 day settlement, underscoring the market demand for such assets. Looking ahead to the second half of 2024, investors are closely monitoring important economic indicators, such as the Reserve Bank of Australia (RBA) and Consumer Price Index ...Cont’d
MARK STAFFORD
July / August 2024 – 43
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