Demand for aged care services is destined to continue well into the future with Melbourne’s population set to double and Victoria’s population to reach 10 million by the year 2031.
According to The Australian Bureau of Statistics by 2037 there will be 6.4 million older people in Australia, an increase of more than 20% of Australia’s total population, highlighting the future demand and requirement for high quality aged care facilities.
Japara, one of Australia's leading providers of high quality aged care services has sold one of its major suburban aged care investment facilities in Springvale and has just listed another two properties for sale in Melbourne.
A local Chinese investor snapped up 340-344 Springvale Road, Springvale, a 71 bed facility for $13.38 million on a 5.6 percent yield. The property comprises 2,780sq m* of floor area on a 4,347sq m* site and is zoned Commercial 1 with a new 6 year lease to Japara Aged Care Services Pty Ltd, a wholly owned subsidiary of ASX listed Japara Ltd offering an annual rental of circa $750,000.
With direct proximity to Springvale Shopping Centre, Springvale Train Station, parks and recreation facilities, the property was sold through Julian Heatherich, Benson Zhou and Mark Stafford of Savills Australia, who said even in the current climate, specific demand for well leased commercial assets is on the rise.
According to Julian Heatherich, Director, CBD and Metropolitan Sales at Savills Australia, unlike many other industries or uses whereby demand and levels of trade can be influenced and determined by economic conditions and external market influences such as internet retailing, aged care services are an essential need and one which is unlikely to dissipate or be undermined by online competition or similar market threats.
“According to the Australian Institute of Health and Welfare, in 2017, there were 3.8 million Australians aged 65 and over (15% of the total population), by 2057 it is projected there will be 8.8 million people aged 65 and over, and 12.8 million people by 2097.
“The Australian Government’s expenditure on residential aged care is expected to rise to $24 billion by 2021, representing an annual increase in excess of 5.4% in the last 5 years” he said.
Since 2010, there has been an increase of approximately 55% in government funding for the aged care industry, and with the increased government target provisions for operational beds per 1,000 people aged 70 and over, access and expenditure in the sector is set to continue. Complementing the support from the government is the stable workforce participation within the sector, with 25% of people having worked in the industry for more than 14 years.
Savills Australia has just listed two new aged care facilities in Melbourne on behalf of Japara: 440 Station Street, Bonbeach and 12-16 Capel Ave, Capel Sound.
440 Station Street, Bonbeach is a high quality 65 bed aged care facility with a brand new 6 year lease with 3 x 4 year options to a wholly owned subsidiary of Japara Ltd with a net rental of $600,000 per annum + GST & Outgoings
A significant refurbishment was completed in 2018 and the 2,2120sq m* building sits on a land area of 3,066sq m* with General Residential 2 Zoning and is just 500m* from Bonbeach Beach and situated within Melbourne’s prestigious bayside region.
12-16 Capel Ave, Capel Sound is a high quality 58 bed aged care facility, also with a brand new 6 year lease with 3 x 4 year options to a wholly owned subsidiary of Japara Ltd and a net rental of $525,000 per annum + GST & Outgoings
A significant refurbishment was completed in 2020 and the 2,200sq m* building sits on a land area of 4,290sq m* with General Residential 1 Zoning and is ideally located in the Mornington Peninsula location just moments from Rosebud Plaza and Rosebud Hospital.
Both Bonbeach and Capel Sound present established residential locations, with immediate access to Port Phillip Bay. The demand for these two residential locations is highlighted by the growth in the median house price over the last 5 years, with Bonbeach growing by 35.54%* and Capel Sound 33.67%* over this period.
Savills Australia and Amicum have also listed 43-45 Herbert Street, Parkdale on behalf of a local private.
The high quality 60 bed aged care home comes with a 15 year lease with two further 5 year options and current net rental of $517,000pa* + GST and outgoings. This land tax exempt property offers a high quality building of 1,960sq m* on a significant bayside landholding of 2,004 sqm* and has General Residential Zone 2 (GRZ2).
The property is in a prime position with an abundance of amenity in nearby Mentone, including full line supermarkets, prestigious schools, public transport and public open spaces, and is just 400m* from Parkdale Beach.
According to Mark Stafford, Director, CBD and Metropolitan Sales at Savills Australia, aged care facilities provide the ideal investment due to their nondiscretionary use and significant forecasted industry growth.
“The aged care industry is a non-discretionary service that is vital to the Australian community. As the population profile in Australia continues to increase, so too does the requirement for these services, as such Government funding to the sector continues to grow.
“Given the significant size of the landholdings and the favourable zoning, these two investments offer long term development potential, with the properties suited to alternative uses, residential development, townhouses etc. (STCA)” he continued.
Benson Zhou, Director, CBD and Metropolitan Sales at Savills Australia said “Unlike comparable investments, many aged care operators are major national and listed companies with significant financial backing, offering a higher level of security for investors.
“The aged care industry comprises a large number of highly reputable tenants often secured by long term leases, ensuring high standards of upkeep and building maintenance for your property in order to meet the regulations and safety standards outlined by the Victorian and Federal government” he said.
Learn more about Savills Metropolitan & Regional Sales.
*Approximate
Sources: abs.com.au; agedcare.health.gov.au