This year’s budget shook up the property industry, with key changes in negative gearing and capital gains taxes, but rising stronger and mightier than ever is the medical sector – according to experts.
Health and what’s been dubbed the ‘care economy’ has been given a lot of love under the Albanese Government, and 2026’s budget announced last week shows little deviation from this.
Health Minister Mark Butler has been tasked with reining in the ballooning cost of the NDIS. Picture: Getty
In this year’s budget, Medicare is getting an extra $3.5 billion injection to aid in building more bulk-billing facilities, as well as reducing the out-of-pocket cost of some procedures for older Australians, and improving Indigenous Australians’ access to health care.
The Pharmaceutical Benefits Scheme is getting an extra $6.5 billion injection to expand what’s on offer for those with cystic fibrosis, chronic kidney disease, and various cancers – among other initiatives.
The government is also tipping an extra $3.7 billion into the aged care sector with the aim of delivering 5,000 extra beds each year, plus expansions to other programs.
Urgent care clinics are also seeing continued love, which act to ease pressure on emergency rooms.
Franz Stapelberg, Principal of RWC Medical QLD, gave an overview of some of the budget items.
“Australia’s population over 65 is the fastest growing cohort [and] the care economy is now one of the largest employers in the country,” he told realcommercial.com.au.
“The budget did three things that matter to property: It put $1.8 billion into making the Medicare Urgent Care Clinic network permanent, taking the national total to 137 clinics; it added $25 billion of incremental funding for public hospitals, taking the five-year envelope to $220.3 billion; and it committed $11.4 billion to a bulk-billing incentive aimed at nine in ten GP services bulk-billed by 2030.”
Ray White’s Franz Stapelberg. Picture: Supplied
Sub-sectors to watch
Mr Stapelberg said the medical asset class is one of the strongest, with weighted average lease expiries (WALE) of seven to 10 years common.
“Corporatisation is materially changing what a landlord is actually underwriting. Instead of a single-practice covenant, you’re increasingly leasing to a PE [private equity]-backed operating group with a much deeper balance sheet sitting behind the lease, which lowers the probability of default and tightens how the market prices the cap rate.
“Last week’s budget reinforces that, rather than disrupting it, because the spending is flowing into the operators who pay the rent.”
Mark Wizel, founder of Your Medical Property – a medical property advisory firm – supported this.
“The reality is simple: Australia is ageing rapidly, healthcare demand is increasing, and the delivery model of healthcare itself is changing,” Mr Wizel said.
Mark Wizel, founder of Your Medical Property, a specialist advisory firm helping medical professionals find their next property. Picture: Supplied
Away from huge hospitals and medical centres, Mr Wizel said there’s a growing fragmentation of medical services, and specialist and boutique firms are at the forefront of change in the sector.
“Healthcare property is no longer simply about owning buildings leased to doctors. The sector is evolving toward operational healthcare ecosystems.
“Large institutional groups [are] historically focused on major stabilised healthcare assets. However, many of the most exciting opportunities now sit within fragmented sub-institutional healthcare property where operational capability matters most.”
Your Medical Property identified several sub-sectors that could benefit from strong investment: Hospital-adjacent healthcare precincts; specialist consulting suites; flexible healthcare room leasing; integrated allied health environments; and pathways that help healthcare operators ultimately transition toward ownership.
NDIS the big white elephant in the room, but key housing needs remain
The most notable shakeup has been to the NDIS, where funding and diagnostics have been tightened to lower-needs funding recipients, such as those with autism and ADHD diagnoses for whom the program was never designed.
Instead, many will be placed on the states-based Thriving Kids program.
The NDIS has ballooned in cost over the past few years, to become the second-largest growth area in the budget – behind interest payments on government debt – at 8%-odd per year. The aim is to taper that back to 2% or so per year.
A slowdown in spending growth on the NDIS will mean lower-needs participants’ demands will shift elsewhere. Picture: Damian Shaw
Already, the NDIS is a $50 to $52 billion hit to the budget bottom line, with average costs per patient about $67,000. This eclipses the universal Medicare program costing about $35 billion per year.
The NDIS sits second only to the age pension – $65 billion – in terms of gross government annual expenditure.
Before health minister Mark Butler announced a shakeup of the NDIS prior to the budget, it was expected to support more than 900,000 participants by 2030. This would have meant Australia proportionately had one of the largest ‘disabled’ populations in the world, and the program’s fastest-growing demographic was boys under 10, many with ADHD or autism diagnoses.
Ray White head of research Vanessa Rader said these patients’ needs will be shifted onto other programs, such as Thriving Kids, which could mean a surge in demand for GP clinics and community care, rather than allied health specialists and therapy programs.
High-needs patients will continue to receive care through the NDIS, which potentially spells good news for the disabled housing sector, according to a Knight Frank report.
Clem Stack, a Knight Frank sales executive focused on healthcare, said the number of enrolled SDA dwellings was 11,642 across Australia at June 2025, which represented a 21% annual increase over the past two years and a 23% increase compared to June 2024.
“Demand from participants continues to outpace availability, with more than 25,000 participants approved for SDA funding, yet a significant proportion still seeking suitable accommodation,” he said.
“Knight Frank’s SDA and specialised accommodation transactions this financial year will exceed $25 million, and we are seeing strong demand from institutional investors with social infrastructure allocations for portfolio acquisitions in the sector.”
Knight Frank’s Clem Stack. Picture: Supplied
The recent Victorian state budget also allocated $18.7 million to build 13 new specialist disability accommodation (SDA) dwellings, with the aim of shifting tenants off group home arrangements.
Like other residential developments, Mr Stack said SDA houses need to be well-located, close to transport and lifestyle amenities to have strong investment credentials.
He also said location and design preferences had changed over the years: Developers solely focusing on proximity to hospitals and other care are losing out to locations focused on amenity and community; and there is a shift away from two-bedroom houses to apartments and villas closer to city centres.
“Investors who prioritise quality construction, strategic locations, and experienced operational partnerships will be best positioned to deliver both strong returns and meaningful social impact in this evolving healthcare asset class.”
The Sunshine State becomes the Healthcare State
Just like California’s wealthy seek Palm Springs’ warm climes in their later years, or New Yorker retirees move south to Florida, Queensland is emerging as Australia’s healthcare capital – particularly the Sunshine Coast.
Ray White Research shows across 2024 and 2025, $800 million worth of medical facilities changed hands; Queensland accounted for $236 million of that, the highest share in the country.
The Sunshine Coast is emerging as a medical hotspot, aided by a record influx of families and an ageing population. Picture: Supplied
“Prime metropolitan medical assets are trading around the high-5s to mid-6s on initial yield, with regional product roughly 50 to 100 basis points wider,” Mr Stapelberg said.
“The point worth making is that medical didn’t soften alongside office and retail through this rate cycle – it held.”
Recent landmark transactions in Queensland include a hospital in Maroochydore and a wellness centre in Noosa Heads.
The Maroochy Private Hospital is set to open its doors in June, marking one of the largest developments in one of Australia’s fastest-growing areas.
The $100 million facility includes six fully integrated operating theatres and accommodation for 45 in-patients, as well as a mix of medical and allied health users.
Radiology, orthopaedics, oncology and research providers are all part of the tenant mix, and the precinct has more than 10,000 sqm of lettable area.
CBRE’s Ryan Parry and Matthew Beaumont handled the leasing on the precinct, who said 95% of the building was pre-committed.
“The Sunshine Coast is seeing significant population and infrastructure growth, and that’s driving demand for high-quality healthcare that’s closer to home,” Mr Beaumont said.
“This project brings together leading operators in a purpose-built environment that supports both patients and practitioners.”
Maroochy Private Hospital opens in June and represents a huge boost for the area. Picture: Supplied
Other recent Sunshine Coast transactions include a medical consulting asset at 57 Bulcock Street in Caloundra for $8.751 million and a 5.49% yield; and 302/11 Eccles Boulevard in Birtinya – a radiology clinic in the university hospital precinct – sold for $6.4 million with a 5.54% yield.
In Brisbane, a radiology site at 89 Tingal Road in Wynnum sold for $10.1 million at a 5.4% yield, while another radiology clinic sold in September last year for $5.615 million with a 5.72% yield at 1/1808 Logan Road in Upper Mount Gravatt.
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