Close X
Monday, November 11, 2024
ADVT 
Health

Aging Population Sparks Investor Interest In Health-Care Real Estate Assets

Darpan News Desk The Canadian Press, 25 Nov, 2015 12:23 PM
  • Aging Population Sparks Investor Interest In Health-Care Real Estate Assets
TORONTO — As aging baby boomers fuel growing demand for health-care services, investors are increasingly turning their attention to medical office buildings — a niche within the real estate market that some argue is recession proof.
 
"Doctors are paid by the government in Canada, so they're pretty secure tenants," says Huy Lam, a broker at Colliers International who specializes in the health-care real estate space.
 
Lam says demand for medical office buildings in Canada has been on the rise in recent years — a trend he expects to continue as the number of seniors in the country balloons.
 
Ownership in the space is fragmented — everyone from institutional investors such as pension funds to real estate investment trusts to wealthy individuals — making it difficult to quantify how much money is flooding in.
 
However, Colliers forecasts more than $211 million in medical office building sales in Ontario alone this year. That compares with $126 million back in 2011, according to data compiled by the commercial real estate brokerage.
 
The Canada Pension Plan Investment Board announced in August that it was taking its first steps into the health-care property space, teaming with a U.S. real estate investment trust to invest in a portfolio of medical office buildings in California worth a total of US$449 million.
 
"Demographics in certain countries make (health-care) very attractive as a long-term investment," said Peter Ballon, head of CPPIB's real estate investment in the Americas.
 
"We do think that there's going to be growing demand for health-care real estate, and we believe that pricing is relatively attractive right now for certain health-care assets."
 
One of the features that makes the space attractive to investors is the fact that it's insulated from most economic turmoil and is unlikely to be threatened by disruptive forces such as e-commerce.
 
 
"Demand for health care is not driven by how the economy is doing," says Chris Potter, a partner at PwC Canada.
 
In its recent emerging trends in real estate report, the consulting firm noted that while U.S. investors have been eagerly snatching up health-care properties for some time, Canadians have been slow to embrace the sector. That, however, is beginning to change, according to the firm.
 
In addition to being an essential service, health-care typically often requires an in-person visit, making it immune to the e-commerce pressures facing traditional retailers.
 
"You can't go and get your teeth looked at online," says Potter.
 
One of the challenges for investors looking to snatch up health-care real estate is a lack of available supply.
 
In Canada, hospitals are publicly owned, which leaves investors restricted to purchasing buildings that contain doctors' offices and other complementary services such as labs, pharmacies and physiotherapy treatment centres.
 
Construction of such buildings in Canada has been fairly stagnant recently, says Lam.
 
"It's very expensive to build them and generally you need more land to build medical buildings because of the parking requirements," he said.
 
NorthWest Healthcare Properties REIT (TSX:NWH.UN), a Toronto-based company that specializes in the space, has been looking beyond Canada to markets such as Germany, Brazil and Australia for investment opportunities.
 
After building out its portfolio of medical office buildings, including 73 such properties in Canada, the REIT is now looking to snap up more fundamental assets such as hospitals — something it can't do on its home turf, according to company CEO Paul Dalla Lana.
 
"Our health system is very specific, so some specific opportunities aren't available in Canada," he says.

MORE Health ARTICLES

Don't Give Flu Shot A Miss This Season Based On Last Year's Failure, Doctors Say

Don't Give Flu Shot A Miss This Season Based On Last Year's Failure, Doctors Say
It's that time of year again, time for Canadians to think about getting that jab in the arm to protect themselves against the dreaded winter scourge — the flu.

Don't Give Flu Shot A Miss This Season Based On Last Year's Failure, Doctors Say

Few Pregnancy Deaths But Maternal Health Challenges Remain: Report

The International Federation of Gynecology and Obstetrics is releasing a report on Tuesday at its triennial congress saying "more work needs to be done."

Few Pregnancy Deaths But Maternal Health Challenges Remain: Report

India, Germany To Cement Ties During Modi-Merkel Meet

Merkel, who arrives here on Sunday night, is on an India visit October 4-6. She will be accompanied by a large delegation comprising cabinet ministers, and businesspersons, and will also be visiting Bengaluru.

India, Germany To Cement Ties During Modi-Merkel Meet

Brain Freeze: Can Putting Faith In Cryonics Deliver Life After Death?

Brain Freeze: Can Putting Faith In Cryonics Deliver Life After Death?
When it comes to death, there's traditionally been two forms of eternal rest: going into a coffin or ending up as ashes inside an urn.

Brain Freeze: Can Putting Faith In Cryonics Deliver Life After Death?

Indo-Canadian Researcher Shows Diabetes Risk For Indians And Other South Asians Begins At Birth

Indo-Canadian Researcher Shows Diabetes Risk For Indians And Other South Asians Begins At Birth
For Indians and other South Asians, the risks of developing Type-2 diabetes begin immediately at birth, warns a study by Indian-origin researchers.

Indo-Canadian Researcher Shows Diabetes Risk For Indians And Other South Asians Begins At Birth

Guidelines Aimed At Preventing Falls, Fractures In Long-Term Care Residents

Guidelines Aimed At Preventing Falls, Fractures In Long-Term Care Residents
If there's one thing Devora Greenspon wants to avoid, it's taking a tumble that could fracture one of her brittle bones, especially a hip.

Guidelines Aimed At Preventing Falls, Fractures In Long-Term Care Residents