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With surging prices and a promising outlook, Singapore’s medical suite segment has emerged as an alternative investment asset to residential and industrial properties, according to a DTZ report.
Currently, 46 percent of the private medical suites are situated in the Orchard Road/Tanglin area, which is considered a prime location for private healthcare services largely targeting medical tourists.
On the other hand, the Novena/Thomson area, which is emerging as a new healthcare hub, accounts for 32 percent of the existing stock of these units.
Collectively, these locations make up 78 percent of the stock of medical suites in Singapore, while the rest are found in other healthcare centres elsewhere in the country such as Parkway East Hospital, Raffles Medical Hospital and Mount Alvernia Hospital.
“Generally, prices of medical suites in Orchard Road/Tanglin have increased consistently over the years. Price movements were less volatile than the office sector, suggesting limited impact from short-term economic changes, and were observed to increase faster than retail values,” said the report.
However, prices of such units surged by around 60 percent between 2010 and 2013, surpassing that of office and retail space, which merely grew by 15 percent and 30 percent respectively.
Specifically, hospital-supported medical suites in Orchard Road/Tanglin are the most expensive. According to the report, units in Parkway Pantai’s Mount Elizabeth Novena were cheaper by 20 to 30 percent on average in 2010.
But the price gap has widened further. For example, “medical suites at the recently completed Farrer Park Medical Centre, were transacted in 2013 at prices ranging from S$3,000 to S$4,200 psf. This was 40 to 55 percent lower than the transacted prices at OrchardRoad/Tanglin for 2013,” noted DTZ.
Medical suites at the Orchard Road/Tanglin area also command a wider rental range of S$8 to S$27 per sq ft per month, while that in Novena/Thomson and Farrer Park/Race Course Road falls within S$8 to S$12 per sq ft per month. Consequently, the former’s average rents are the highest at S$13 per sq ft per month.
Moving forward, six developments yielding 335 private medical suites are expected to be completed between 2016 and 2018. Except for Raffles Medical Group’s new medical centre at Holland Village, all forthcoming stock are sited within mixed-use projects like The Flow, SBF Centre, Farrer Square, Vision Exchange and Royal Square, which were launched for sale from March 2013 to April 2014.
However, the majority of the upcoming medical suites have smaller sizes of below 600 sq ft, while the average sizes for most of the existing units at Gleneagles and Mount Elizabeth Orchard are between 600 sq ft and 1,200 sq ft.
Additionally, prices and rents of these units are expected to rise further given the robust demand and their limited supply till 2016.
While Orchard Road/Tanglin has already cemented its reputation as a medical hub for tourists and locals, the demand for medical suites in the Novena/Thomson area is forecasted to be the strongest.
“Indeed, the price of medical suites at Mount Elizabeth Novena has increased substantially in 2014 so far, with sellers seeing gains of between 55 and 70 percent,” it added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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