- The bayside suburb has recently seen high levels of investor activity
- St James Terrace aged care facility dates back to 1985
- The 3,266sqm site is zoned residential, presenting a long-term opportunity for the new buyer
Amid growing investor interest in the Melburnian suburb of Cheltenham, an aged care site has been sold for $5.8 million.
Dating back to 1985, St James Terrace is a residential services facility that is located on 294-296 Warrigal Road.
The 3,266sqm site has recently been purchased by an undisclosed international investor.
As the site is zoned general residential, according to CBRE this accordingly offers investors long-term development opportunities in south-east Melbourne.
CBRE’s Healthcare & Social and Development Sites teams managed the sale with the teams recently selling an aged care facility last year in Boronia near the Dandenong Ranges for $11.3 million.
Reflecting on the sale, Mr Jimmy Tat from CBRE observed that since 2018 investors interest and appetite for well-placed assets within the aged care sector has grown year-on-year. He predicts 2021 will be a breakout year for the sector as an investment class.
“We are fielding growing interest in these investments from both international and local investors, very similar to the market we saw for medical centres in 2015 and 2016,” said Mr Tat
Mr Tat further added investors are drawn to aged properties in part due to their land-tax exemption status.
The facility consists of 45 beds with the tenant being on a five-year lease with an additional five-year option, making the sale an attractive long term investment.
“These investments are land-rich in nature and offer strong underlying land values, with median sizes of 4,000-5,000sqm for single and two-level facilities,” said Marcello Caspani-Muto of the CBRE Sales team.
“Aged care is undeniably going through a time of expected reform, but investing in a reputable and well-managed tenant can result in a highly-desirable, long-term holding.”
With a final report and recommendations from the Royal Commission into Aged Care Quality and Safety Set due soon, the possibility of greater government funding in this sector could also brighten the longer-term outlook for the aged care sector, says the sales team.