Healthcare real estate performance

Performance versus traditional property segments

According to MSCI (formerly IPD) research, healthcare real estate has outperformed traditional real estate segments. The chart below illustrates healthcare real estate’s resilience over the last ten years, with much lower volatility in returns through a deep cycle, compared to many of the traditional property asset classes.

A key reason driving the return profile is the very defensive characteristics of healthcare real estate in general. Typically, income and capital returns on medical centre and hospitals have a very low correlation to the economy - compared to retail, office and industrial real estate, which typically performs on a more closely correlated basis to economic activity (employment, business and consumer confidence, residential housing, interest rates and so on.

 

AUS direct property total returns annualised return on quarterly periods to December 2016