The Valuers' View - Health Care/Medical

July, 2020

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  • Health & Aged Care
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A survey of m3property Valuers

The Valuer’s View

In times of uncertainty where transactions are limited and new trends establishing, industry participants place even more reliance on Valuers to provide market guidance.

To assist lenders, investors and owners, the Valuers at m3property have contributed their opinions on the current state of the property markets and where they expect those markets to head over the next 12 months.

This is the fourth report in a series of papers on the major sectors of the Australian property market and focuses on Health Care/Medical property.

Key Health Care/Medical Sector Insights

  • The spread between prime and secondary yields is expected to widen as risk is re-priced.
  • Expect minor movement in face rents, however, a reduction in effective rents, due to upward pressure on incentives.
  • Values are expected to stabilise over the next 3-12 months. Short-term cash flow uncertainty is expected for secondary centres.

Value Comparison by Sector


Laila Burnet

National Director - Health, Aged Care & Seniors Living

View Profile > VIC
Casey Robinson

National Research Specialist

View Profile > QLD

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Stages of the COVID-19 recession

The COVID-19 crisis is likely to have three distinct stages:



Survey Results


“Market activity is demonstrating early signs of traction as vendors are showing renewed sentiment, albeit tentative, with many leveraging the sector’s underlying appeal in the pursuit of reducing debt or raising investment capital.”

Laila Burnet
National Director Health, Aged Care and Seniors Living


  • No significant transactions have occurred during COVID-19 to date, vendors have either halted or postponed potential transactions.
  • We are awaiting the results of significant assets currently being tested on the market.
  • A widening of the yield gap between prime and secondary assets is expected over the next 12-18 months.


  • IRRs are likely to stabilise for prime Health Care/Medical assets.
  • Secondary property is likely to witness slight softening of IRRs.


  • Prime net face rents have been stable across most markets over COVID-19 to date.
  • With the restarting of elective surgery some slight rental growth is possible for prime centres over the year to December 2020.
  • Secondary rents are likely to decrease slightly.


  • No significant leasing transaction has been noted to date. We are awaiting further market data.


  • Values for Health Care/Medical assets are likely to stagnate over the next 6-12 months with cash flow uncertainty and heightened detrimental assumptions, offset by marginal annual rent increases.
  • The third quarter of 2020 will be the most telling period for the market.