South Australia is quietly emerging as a powerhouse in the medical property investment sector, and the numbers speak for themselves.
In the six months to November, eight medical-grade leased investment properties publicly changed hands across the state, totalling 8,500 square metres and delivering investors a median cap rate of 5.95%. Compare that to Western Australia, which recorded the same number of transactions but only 2,500 square metres and a softer cap rate of 6.38%.
“South Australia is an underrated player in the market of Medical, Health and Life Science assets,” said Jack Dascombe, Senior Executive of Investment Sales at Cushman & Wakefield. “We foresee strong consumer demand for both general and specialised clinics, and consequently robust competition among buyers for assets underpinned by these operators.”
The scale of South Australian facilities is a key differentiator. The median size of properties sold here was 981 sqm, more than double that of New South Wales at 410 sqm. That size advantage translates into higher sale prices, with SA recording a median of just under $6.1 million; a stark contrast to WA’s $950,000.
This trend toward larger and more sophisticated facilities is accelerating. Over the past 18 months, the median size of transacted medical-grade properties in SA has grown from 629 sqm to 981 sqm. Interest rate reductions earlier this year and SA’s stamp duty exemption on commercial property have further fuelled investor appetite, particularly from interstate buyers. In the past 12 months, nearly 40% of SA’s medical investments over $5 million were purchased with interstate capital.
“The demand isn’t just investor-driven, it’s structural” said Mr Dascombe. “South Australia’s aging population, affordability, and a shortage of medical facilities are key contributing factors. The State Government’s $1.9 billion health system injection, the $3.2 billion Women’s & Children’s Hospital, and Flinders University’s $300 million HealthCARE Centre demonstrate the sheer level of ongoing investment SA is receiving in an effort to keep up with this demand.
“Visits to GPs, dentists, and allied health professionals are all up year-on-year, according to NAB’s latest Health Insights Report, and NDIS-related services are surging. SA has the highest percentage of NDIS participants relative to its population, representing 8.8% of the country’s total”.
Location remains king. “Sixty percent of people surveyed said proximity was the most important factor when choosing a health professional,” Mr Dascombe notes. “That’s reflected in the market: 55% of SA’s medical investment sales this year were within one minute’s drive of a major shopping centre, and the rest within five.
“For investors, the message is clear: South Australia continues to deliver quality over quantity. With robust fundamentals, government backing, and a growing demand for health services, medical-grade property in SA stands strong nationwide and is a strategic play more than ever” he said.
Source: Cushman & Wakefield, Real Commercial, CRE listings, RP Data
