Life sciences and healthcare property sectors get a boost
Occupation, development and acquisition of property dealing in the life sciences and healthcare sectors has grown significantly over the past few years – and for good reason, according to a Colliers report.
Key features behind the boost include an ageing population and increasing life expectancy, the rising prevalence of chronic and transferable diseases such as Covid-19, and the lift in people’s attitudes towards personal health and wellbeing.
Chris Dibble, director of Strategic Advisory at Colliers, says the growing demand to cater to these factors is leading to higher leasing, development and investment activity in this less prominent part of the nonresidential property sector.
“While New Zealand’s life sciences and healthcare property sectors are not as progressed as some other
major offshore markets, many advancements are being made locally, suggesting it’s only a matter of time.
“With further growth and evolution in the industry over the next few years, an awareness of the sector’s benefits and an in-depth understanding of market dynamics is becoming increasingly important for all property stakeholders,” Dibble says.
“We have undertaken a number of demand and supply, demographic and market benchmarking studies for local and offshore private and listed groups looking to grow in the sector, from an occupational and investment perspective.
“Opportunities are being snapped up by a small but increasing number of parties.
“While the sector is growing, providing more opportunities overall, the best spots are increasingly facing higher levels of competition as people cotton on to the sector’s advantages,” he says.
A review of recent OECD data by Colliers highlights that out of 52 countries globally, New Zealand is above average in total healthcare expenditure as a percentage of GDP from 2019-21.
Renee Lintott, senior analyst in the Strategic Advisory team, says one of the factors for increased spending in healthcare that New Zealand faces is apparent in many countries.
“A shift in our population age structure arising from the acceleration in the ageing of the population and lower fertility rates is clear,” Lintott says.
“According to the latest Stats NZ data, between 2022 and 2028, the number of people aged 65-plus will increase by almost 20 per cent, reaching around 1 million people. This is projected to reach 1.3 million people by 2040 and around 1.5 million people by the 2050s.
“This means that while approximately one in every six people in New Zealand is above the age of 65 currently, this will increase to around one in every four people being over the age of 65 by 2050.”
Lintott notes that it is not only public health expenditure that is set to rise as the population ages and governments fight chronic and transmissible diseases, but also growth in the private health insurance sector. “Furthermore, as a consequence of Covid-19, people’s interest in their own health and wellbeing is increasing significantly, adding further to the sub-components boosting health expenditure.”
Investor appetite for specialised assets such as life science facilities and healthcare centres is set to rise as investors venture further in search of product with strong underlying demand drivers and attractive market yields.