This article is from the Australian Property Journal archive
DESPITE the royal commission and Victorian COVID-19 outbreak in 2020, an aged care facility in Melbourne has sold for $5.8 million, as both local and international investors continue to show confidence in the sector.
The facility, St James Terrace, in Melbourne’s south east suburb of Cheltenham is comprised of 3,266sqm, houses 45 beds and is zoned general residential.
The 294-296 Warrigal Rd facility was acquired by an overseas investor after a campaigned managed by CBRE’s David Minty, Jimmy Tat, Marcello Caspani-Muto and Nathan Mufale.
“Investor interest and appetite in the aged care sector has been increasing year-on-year since 2018; it is well-placed to be a breakout investment class in 2021,” said Tat.
The sale was managed by CBRE’s Healthcare and Social and Development Sites teams who last year sold a Boronia aged care facility for $11.3 million.
“We are fielding growing interest in these investments from both international and local investors, very similar to the market we saw for medical centres in 2015 and 2016,” he said.
The current tenant purchased the business in 2013, with a lease of five years with the option for an additional five years.
“Despite some of the sentiment around aged care in 2020, investors continue to gravitate towards the sector, largely drawn by the fact these properties are land-tax exempt while they are being used as an aged care or supported residential services facility,” said Tat.
This sale also comes after the Andrews Government revealed plans for a $134.6 million aged care facility in the same Melbourne suburb of Cheltenham in late 2020, as part of the state government’s ongoing investment in public aged care.
“These investments are land-rich in nature and offer strong underlying land values, with median sizes of 4,000-5,000sqm for single and two-level facilities. Aged care is undeniably going through a time of expected reform, but investing in a reputable and well-managed tenant can result in a highly-desirable, long-term holding,” added Caspani-Muto.
Caspani-Muto also emphasised investors interest into the upcoming release of its final report.
“The industry is awaiting positive news around the potential for increased government funding measures, which would bolster the longer-term outlook for aged care providers,” he concluded.
