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PYRINAS NEWSLETTER | MARCH 2020
Investment in Commercial Real Estate:
How Clinics Add Value and Resilience

Influence of Coronavirus on Mainstream Business and Commercial Properties

Amid the outbreak of Coronavirus, business in stock markets, global manufacturing, transportation and cross-border supply chains underpinning many aspects of international trade and commerce are greatly influenced, and that the global economic growth could be cut by half (Richard Partington and Phillip Inman, 2020). Commercial properties are about to slide further into the doldrums as the coronavirus epidemic saps demand. Nevertheless, against all odds, the virus gives rise to the already soaring demand from healthcare providers for commercial real estates. In this newsletter, we discuss the potentials of medical centres and how clinics add value and resilience to the valuation and prospect of commercial real estates in a global perspective.

Robust Demand for Commercial Real Estate for Healthcare Providers:
Potentials of Clinics

Even before Covid-19, there has been a surge of need for healthcare provision in relation to people’s longer life expectancy, growing emphasis on healthcare, as well as the business potentials facilitated by innovative healthcare technologies. A latest report published by CBRE Research in November 2019 shows revenue from medical centres will grow from HKD 33 billion in 2017 to HKD 45 billion by 2022 in Hong Kong, a small special administrative region with easy access to 1.4 billion potential customers. While like many other big cities, medical centres and life-science laboratories are in unmet demand in Hong Kong due to limited supply of commercial properties, this in turn fosters extensive business investment opportunity nationwide.

How Clinics Add Value and Resilience to Commercial Real Estate

One striking benefit of having clinics as tenant of the real estate property is that they tend to enhance stable occupancy and react inelastically with economic cycles. Such resilience adds value to prospect of the real estate and surrounding neighbourhood. Investing in clinics also mean that the area benefits from greater accessibilities to medical talents and services - a clear facilitator of higher valuation. Besides, people tend to have inelastic spending on medical service, resulting in stable business revenue.

Investment in Clinics in and beyond Asia Pacific: Talem Medical Group

Investing in emerging markets like South East Asia regions is the mainstream advise. However, one shall consider the boarder prospect of healthcare real estate since primary necessities concerns all and the need for healthcare provision has considerable viability. For example, Pyrinas Real Estate’s affiliate Talem Medical Group gathers an experienced team of clinical service operators, business developers, and in-house clinical governance team with current and past operations in Hong Kong and Singapore. Further supported by advisory network of clinical specialists and scientists, and teams in health care real estate management, financial servicing, legal, and medical administration, the Group sees huge potential in premium clinical services with a focus on outpatient and ambulatory with selected specialties (ENT / Women & Children / Preventive medicine). The Group is now expanding into Australia and Southeast Asia market, further strengthening their global premium brand in Medical Facilitations and Healthcare providers.

Bibliography

  • Richard Partington and Phillip Inman (2020). Coronavirus escalation could cut global economic growth in half – OECD. Published on The Guardian. Retrieved on 12 March 2020.
  • Marcos Chan and Reeves Yan (2019). Healthy Returned: Medical real estate opportunities in Hong Kong. Published on CBRE Research. Retrieved on 12 March 2020.


At Pyrinas, we bring with you diverse investment opportunities across different real estate classes in various mature markets across the globe.We seek to identify compelling investment opportunities utilizing the local market knowledge gained from the firm’s investment teams.

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