{"id":65645,"date":"2015-11-25T09:51:37","date_gmt":"2015-11-25T15:51:37","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=65645"},"modified":"2015-11-25T09:51:37","modified_gmt":"2015-11-25T15:51:37","slug":"aging-population-sparks-investor-interest-in-health-care-real-estate-assets","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2015\/11\/25\/aging-population-sparks-investor-interest-in-health-care-real-estate-assets\/","title":{"rendered":"Aging population sparks investor interest in health-care real estate assets"},"content":{"rendered":"
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TORONTO \u2013 As aging baby boomers fuel growing demand for health-care services, investors are increasingly turning their attention to medical office buildings \u2013 a niche within the real estate market that some argue is recession proof.<\/p>\n

\u201cDoctors are paid by the government in Canada, so they\u2019re pretty secure tenants,\u201d says Huy Lam, a broker at Colliers International who specializes in the health-care real estate space.<\/p>\n

Lam says demand for medical office buildings in Canada has been on the rise in recent years \u2013 a trend he expects to continue as the number of seniors in the country balloons.<\/p>\n

Ownership in the space is fragmented \u2013 everyone from institutional investors such as pension funds to real estate investment trusts to wealthy individuals \u2013 making it difficult to quantify how much money is flooding in.<\/p>\n

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.<\/p>\n

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.<\/p>\n

\u201cDemographics in certain countries make (health-care) very attractive as a long-term investment,\u201d said Peter Ballon, head of CPPIB\u2019s real estate investment in the Americas.<\/p>\n

\u201cWe do think that there\u2019s 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.\u201d<\/p>\n

One of the features that makes the space attractive to investors is the fact that it\u2019s insulated from most economic turmoil and is unlikely to be threatened by disruptive forces such as e-commerce.<\/p>\n

\u201cDemand for health care is not driven by how the economy is doing,\u201d says Chris Potter, a partner at PwC Canada.<\/p>\n

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.<\/p>\n

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.<\/p>\n

\u201cYou can\u2019t go and get your teeth looked at online,\u201d says Potter.<\/p>\n

One of the challenges for investors looking to snatch up health-care real estate is a lack of available supply.<\/p>\n

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.<\/p>\n

Construction of such buildings in Canada has been fairly stagnant recently, says Lam.<\/p>\n

\u201cIt\u2019s very expensive to build them and generally you need more land to build medical buildings because of the parking requirements,\u201d he said.<\/p>\n

NorthWest Healthcare Properties REIT, 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.<\/p>\n

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 \u2013 something it can’t do on its home turf, according to company CEO Paul Dalla Lana.<\/p>\n

\u201cOur health system is very specific, so some specific opportunities aren\u2019t available in Canada,\u201d he says.<\/p>\n","protected":false},"excerpt":{"rendered":"

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