Is healthcare real estate a lucrative investment in Australia?

There has been a steady increase in investor interest for this sector.

Healthcare total returns in Australia are increasing and expected to rise in the year ahead. According to a report from Dexus Research, there have been relatively few large transactions in recent months, however investor interest in healthcare remains solid and is pivoting toward day hospitals, specialist clinics and life sciences hubs—assets that align with outpatient care trends and shorter patient stays.

“These formats offer higher throughput, lower operating costs and strong alignment with both public and private healthcare priorities,” the report added.

Here’s more from Dexus Research:

Healthcare real estate continues to demonstrate strong defensive characteristics. Prime hospital assets are displaying relatively stable valuations, reflecting investor confidence in essential infrastructure and long-term income stability.

Despite recent challenges with operating costs, conditions are expected to improve over the next few years given an easing of the overall inflation rate, investment in workforce training and increases in funding via the Medicare and Private Health Insurance (PHI) programs.

While there has been a focus on issues faced by hospital operator Healthscope, those issues are not necessarily reflective of the entire private hospital sector given the high debt levels involved. While the level of private health insurance service payments to hospital operators came under the spotlight, mitigation measures are already being taken.

The Minister for Health and Aged Care approved an average 3.7% increase in health insurance premiums and creation of the Private Health CEO forum to examine further reforms. The Government has acknowledged the extra $350 million in voluntary payments PHIs have contributed to the sector in the past few months. They have ceased any regulatory intervention for the short term, noting they anticipate further voluntary payments, helping close the funding gaps.

All levels of government are motivated to resolve capacity issues in the healthcare sector. Several state governments have introduced funding initiatives aimed at training and recruiting frontline healthcare workers.

For example, Queensland is investing $1.7 billion to grow its health workforce by 45,000 staff by 2032, including doctors, nurses and allied health professionals. The NSW budget includes $274.7 million to boost staffing at newly built and upgraded hospitals, adding 250 healthcare workers.

In relation to Medicare, growth in funding is now exceeding the broad inflation rate. The Federal Government is expanding Medicare bulk billing incentives and introducing the Bulk Billing Incentive Program from November 2025.