Stars align for attractive opportunities in healthcare property

The stars have aligned for the Australian healthcare property sector to present attractive growth opportunities for institutional and wholesale investors in 2025, according to a specialist alternative investment manager.

Barwon Investment Partners, manager of three specialised funds with over $3.2 billion in total funds under management and $2.2 billion in Australian healthcare property assets, said a combination of “demographic trends, structural shifts and strategic capital allocation” has paved the way for wholesale and institutional investors to capitalise on “compelling” opportunities.

Healthcare currently accounts for 11 per cent of Australia’s GDP and is expected to increase by two per cent by 2030, as the population continues to age and care delivery continues to improve.

“The healthcare property sector offers stable income, and inflation-linked returns, making it a defensive and attractive asset class,” Srimathi Iyengar, Portfolio Manager of the Barwon Institutional Healthcare Property Fund, said.

“With valuations stabilising and interest rates steadying, 2025 marks a compelling entry point for investors.”

The manager’s three funds, the Barwon Institutional Healthcare Property Fund, the Barwon Healthcare Property Fund, and the Barwon Disability Accommodation Fund, each provide investors with exposure to unique opportunities, such as the rise of the Specialist Disability Accommodation (SDA) sector which is part of the National Disability Insurance Scheme (NDIS).

The SDA sector boasts a 37 per cent annual compound growth rate in the last three years, as more institutional investors have contributed to the delivery of “inclusive, high-quality and technology-enabled homes” for eligible people with disability across Australia. Just in the last year, the number of enrolled places has increased by 44 per cent (3,388), with a further 5,532 places in the pipeline (an increase of 75 per cent).

Joss Engebretsen, Portfolio Manager of the Barwon Disability Accommodation Fund, said the SDA space presents a unique opportunity for investors to support the Commonwealth’s $700 million commitment and also deliver more positive social impact.

“The SDA market is entering a phase of consolidation, where scale, experience and strategic asset selection are critical. It is essential to identify a clear target demographic of eligible SDA participants who wish to reside in the proposed location, along with a strategic plan to achieve full occupancy to ensure project success,” he said.

“The Barwon team is focused on acquiring and managing purpose-built properties to meet the needs of SDA-eligible participants while delivering stable, CPI-linked returns for investors.

“As the sector enters a phase of consolidation, established platforms with scale will be best positioned to acquire strategically located assets or portfolios that demonstrate strong occupancy rates and have a proven trading history, allowing for accurate assessment and pricing.”