WHY HEALTHCARE?
An ageing population, increased life expectancy and improved government funding have increased the demand for healthcare services, as has technological innovation and medical research. Australia spent nearly $181 billion on health in 2016-2017 – more than $7,400 per person. Around 70% of this spend is funded by the federal and state governments and enjoys broad support across the political spectrum.
Medical super-clinics, also known as health-hubs or healthcare ecosystems, is a relatively new concept but growing in popularity as co-locating multiple health services in a single location benefits both health providers along with the communities they service.
Healthcare is also relatively resistant to disruption by digital transformation in comparison to other sectors and is considered to have an increased level of resistance to business cycle and economic downturns. Tenants in this sector are generally stable due to their government revenue streams and the high cost of tenancy fit-out and as such usually operate from the same location for decades.
WHY CHILDCARE?
Childcare, as another example of social infrastructure, co-exists well with healthcare services and shares many of the investment characteristics of healthcare, such as government funding and resistance to digital disruption.
Australians spent over $13.3b on childcare services in the 2018 financial year, an increase from $11.8b in the previous financial year. As at September 2019, there were over 1.34m children in childcare across Australia with 436,000 residing in New South Wales. In 2018, government spending relating to the Child Care Subsidy exceeded $7.1b with over 80% of funding subsidising centre based childcare facilities.
Similar to healthcare tenants, childcare operators secure long term leases (usually 15+ years). Additionally, childcare assets have demonstrated strong yields combined with regular increases in daily fees over the past 10 years.