QLD MARKET OVERVIEW
THE PROPERTY DEVELOPMENT REVIEW
QUEENSLAND
Sam Biggins - Partner, National Head of Healthcare & Life Sciences Knight Frank Brisbane
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. Depending on the investor profile we are seeing sentiment range from caution to what I would phrase as counter-cyclical optimism. Most sector-focussed REIT’s are currently reviewing their portfolios and will likely continue to be net sellers of non-core assets for the remainder of the calendar year; This creates an opportunity for new-to-sector investors to acquire assets which in a normal market they would not have had access to. I expect sentiment will largely be dictated by any interest rate movements for the remainder of this year, and in Q4-Q1 25 we will begin to see the offshore investors who have been monitoring our market for some time deploy capital. One area of sustained activity has been the senior living sector – this is driven by two things, one being the overall supply:demand disconnect of product for this demographic, and secondly the current and looming obsolescence of the older-style retirement villages and aged care facilities. Changes in RACF legislation and market expectations of higher quality accommodation are driving divestments of legacy assets, and simultaneously we are seeing consolidation in this sector. Both the retirement and aged care sectors have seen significant institutional activity in the last 12 months with global investors such as EQT Partners and Bain Capital entering Australia and scaling up their development pipelines. In terms of capital, what’s driving investor interest into alternative asset classes over & above more traditional real estate sectors. The increase in capital allocation into alternatives has been building for several years with ‘meds, beds and sheds’ routinely touted as the sectors of focus in institutional capital allocation surveys. ...Cont’d
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, student accommodation, self- storage, co-living or life sciences) so far in 2024. Thank you for the chance to contribute to the magazine – this is a great publication and there’s always a few copies in our offices, both back of house and in our client meeting spaces at the front. My focus is on the healthcare and life sciences sectors which are still experiencing a positive level of investor interest. In terms of healthcare we are seeing several themes – stabilised primary care assets, typically sub-$10m in key metropolitan and regional markets are still keenly sought by private investors given the resilient nature of their typical anchor tenants, being GP’s and pharmacy businesses. Conversely we are seeing a number of the established healthcare REITs capitalizing on the liquidity of these assets and divesting them into the market as their portfolios mature and they seek to focus on larger institutional-grade, acute-care or day hospital style assets or their development pipelines of the same. We are also seeing the emergence of new-to-sector capital, in particular syndicators and larger family offices who are aggregating portfolios of healthcare assets and in some instances acquiring assets in the middle market ($20-100m). Life Sciences continues to build momentum as an adjacent asset class to Healthcare however there is a lack of available pure-play Life Sciences assets to invest into which is encouraging development. The recent announcement by Kurraba Group and their partners on their $490m, 26,642sqm Waterloo project is a prime example of the sector becoming more sophisticated domestically and will be a fantastic precinct upon completion. We’ve been fortunate to share a more comprehensive overview of the Life Sciences sector and our recent UK Study Tour in this magazine on the following page.
SAM BIGGINS
July / August 2024 – 61
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