Part 1: Aged Care: In the wake of the COVID-19 pandemic, the property development and property investment industries have become somewhat subdued. It’s safe to say that the initial shock and panic are behind us, but the horizon is still a little hazy. It remains to be seen what ‘normal’ will be like when we get on the other side. But that doesn’t mean we should just wait and see.
The essential services property sector is one of the most stable and least affected of the current market. If anything, the virus is demonstrating to the world the very definition of ‘essential service’. In this three-part series, Development Ready will be diving into three sub-categories; Child Care, Health Care and Aged Care (below). With expert advice from CBRE’s Josh Twelftree and Jimmy Tat, we’re highlighting what these sectors currently look like, where they’re heading and why, whether you’re an investor or a developer, you need to start investigating essential service properties.
Australians are living longer than ever. The ABS reports that over the 20 years between 1999 and 2019, the proportion of the population aged 65 years and over increased from 12.3% to 15.9%.
“This group is projected to increase more rapidly over the next decade, as further cohorts of baby boomers (those born between the years 1946 and 1964) turn 65. By the end of the 2019 calendar year, nine of these birth-year cohorts will have reached age 65 and there are ten remaining.” The ABS stated in their Australian Demographic Statistics (Jun 2019) report.
As a result, investment and property development opportunities in the retirement and aged care sectors are becoming increasingly sought-after.
“This is an exciting sector that we’re anticipating will garner significant increased attention in the coming 6-12 months,” Jimmy Tat, Asian Capital within CBRE’s Healthcare & Social Infrastructure team, said.
“Developers in this space are seeking sites with plans and permits in place. Those that come with bed licenses are very favourably looked upon.”
Aged Care is not what is was 50 years ago – it’s not even what it was 20 years ago. Operators are now looking for alternatives and moving away from traditional 20,000sqm sites to higher density living models. They’re also focusing on blue-chip locations and facilities that cater specifically to a new aging population, which has differing needs and requirements to its traditional counterparts.
“Experienced aged care operators are looking at how they can evolve their practice. They want to be able to service a wide range of needs; from retirement style living, to high service aged care,” Jimmy Tat continues.
“It’s about offering a mix. They want to be flexible, capable and trusted. Operators are asking themselves, and their developers, how they can incorporate other services into their mix. Can they include a Medical Centre? Can they include specialised treatment centres? How can they provide their clients with the facilities and services that they are have earned after a long life of hard work?”
How we will define ‘normal life’ in the post-COVID-19 era remains a little unclear. In unsure times, people naturally gravitate towards areas that feel more sure, and with that the stability of essential service asset sectors, like aged care, is becoming even more evident. With both operators and end-users requesting new needs and desires, aged care is also tipped to be one of the most exciting development sectors of the future. Just remember that with every opportunity that blossoms, it’s the first movers that reap the most rewards.