Victorian aged care: More than 300 beds stripped from homes as operators tap out
More than 300 aged-care beds have been stripped from Victoria in the past 18 months despite a “great tsunami” of Baby Boomers on the cusp of entering the aged-care system.
One of the state’s biggest commercial real estate firms has revealed record sales of aged-care homes in the state in 2022 which are on track to be topped again in 2023.
But with sales data from CBRE showing six out of eight aged care facilities sold in the state since the start of last year went to non-aged care providers, there are concerns the industry’s capacity could be falling.
Combined they account for 310 aged care beds, and a Donvale site with 115 beds connected to it has also recently hit the market.
CBRE’s Marcello Caspani-Muto said depending on the size of the property, they were being turned into hospital-grade rehab facilities and even snapped up for uses within the National Disability Insurance Scheme (NDIS).
Some buyers are then spending up to $3200 a square metre to overhaul them for both physical and mental rehabilitation use, with the higher income achieved meaning these operators could outbid more traditional aged-care operators.
Mr Caspani-Muto estimated building a new centre costs about $350,000 a bed.
“This market will keep going quite quickly, and in a couple of years there’s going to be a big problem for aged-care,” he said.
“There’s been a lack of new development for years. In three to four years, everything will be full.”
His concerns come as CBRE’s Australian Healthcare and Social infrastructure commence the sale of a now vacant 115-bed aged-care home at 296-302 Springvale Rd, Donvale.
Formerly run by Bupa Aged Care, the nursing home is tipped to attract interest above $14m from retirement living service providers, as well as healthcare, NDIS operators and other investors.
The 18,224sq m property includes 6600sq m of building spaces, the biggest CBRE have put to the market in the past decade.
Colleague Sandro Peluso said high construction costs were making established sites more appealing.
“Building new hospitals or aged care homes of this scale today is simple not feasible for the majority of operators and this is why we have seen such a ramp in competition from users wanting to purchase this type of real estate,” Mr Peluso said.
Aged care provider Bolton Clarke general manager of property development James Mantis said there had been a consolidation in the market, as some smaller providers were finding it challenging to stay afloat just as a “seniors bubble” or “great tsunami” of Victorians that would require aged-care facilities was fast approaching.
“We want to be prepared to be able to meet that demand,” he said.
“Over the last three years, we have acquired 22 new care homes (in Victoria). So our position has been to strengthen our presence and to grow our presence.”
Apollo Investment director Nicholas Logan-Alessio said his firm was encouraging wealthier mum and dad investors to fund new NDIS approved properties, which could provide alternatives to young victims of acquired brain injuries and similar conditions who often wind up in aged-care beds.
“There are a lot of beds taken up in aged care facilities by NDIS participants who can’t find suitable accommodation,” Mr Logan-Alessio said.
He added that with brand-new homes suited to the scheme often cheaper than retrofitting other properties, they were hoping the higher returns open to homes suitable for care programs could encourage more to be built by wealthier mum and dad investors turning away from more traditional investments in the housing market.
— with Nathan Mawby.