What the doctor ordered
Total Property - Issue 3 2016
New Zealand’s health sector property market remains strong with numerous purpose-built developments underway and larger-scale acquisitions being finalised.
The private sector has benefited from increasing wealth, expansion of private medical insurance, concerns about public hospital waiting times and growing awareness of health-related issues.
Health insurers are also under pressure to improve efficiencies by locating private hospitals alongside major public hospitals to allow shared specialist services like pathology and radiology.
Market players include:
Vital Healthcare Property Trust is an NZSX-listed property trust with nearly $1 billion invested in high-quality health related properties in New Zealand and Australia. It’s New Zealand’s only listed healthcare real estate vehicle with assets including: Ascot Hospital and Clinics, and Ascot Central in Greenlane; Apollo Health and Wellness Centre in Albany; Kensington Hospital, Whangarei; and Napier Health Centre. Vital has also conditionally purchased Lower Hutt's Boulcott Hospital (opposite Hutt Hospital) for $30.7 million.
CEO David Carr says the company’s strategy is to have a mixed range of asset classes including hospitals (surgical, mental health and rehabilitation), medical office buildings, aged care and strategic holdings, but recent acquisitions increased the portfolio’s aged-care weighting.
Green Cross Health group, an NZX-listed provider of primary healthcare services, has 32 medical centres nationally and provides services to a network of 47 practices – with around 20 under The Doctors brand. It also has 340 pharmacies under its umbrella comprising a mix of owned, partnership and licensees. The group also provides community nursing and home support services to around 23,000 clients in their homes and communities.
General manager, medical division, Shaun Smith, says ownership of bricks and mortar medical facilities is not part of the group’s strategy. He says the group focuses on areas where it can best service local populations creating regional hubs to deliver easily accessible healthcare services.
Ash Parma, a Wellington property investor, is developing and managing a two-level, 4,000m² medical-related project in the Hutt Valley. Pama says medical tenants have very specific requirements but they tend to take long-term leases and that is great for landlords. “Purpose-built medical hubs generally show good yields underpinned by strong tenant covenants,” he says.
Mauranui Clinic in Epsom is the creation of Hamish Sillars and Bren Dorman - ear, nose and throat specialists – who wanted a highly-spec’d medical clinic with multiple suites for fellow professionals. Mauranui has more than 1,000m² of space over two levels with suites ranging from 60m² to 100m². “A recent study found that patients value ease of access, good parking facilities, nice consulting rooms, and being close to other services,” says Sillars.
Better Health runs a number of integrated family health centres with its latest project in Christchurch’s Eastgate shopping centre called The Loft. “We took a punt and designed a 1,000m² medical centre planning ahead for expansion and successfully cast around for medical tenants to join us,” says a director, David Jones. “Well-located and well-spec’d facilities, attract long-term tenants giving all parties security,” he says.
O’Connell Construction is a property investor and developer of a two-level 2,400m² medical hub in Timaru. Peter O’Connell says the centre is close to the public hospital and constitutes a 'one-stop medical shop’ with good patient, wheelchair and ambulance access; generous onsite parking, a drive through patient drop off area, triage facilities, after-hours services, links to the pharmacy, and a stretcher compatible lift.
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