Dexus breaks ground on $1b North Shore health precinct

Dexus breaks ground on $1b North Shore health precinct

1 March 2019

Dexus has broken ground on its North Shore Health Hub, conveniently located opposite Sydney’s Royal North Shore Hospital and North Shore Private Hospital, in the first stage in what the company hopes will one day expand to a $1 billion healthcare precinct, says the AFR.

The initiative is the most substantial effort yet by Dexus—the country’s biggest office landlord with close to $30 billion in assets—to bring healthcare real estate firmly into its portfolio.

As PropertyHQ reported last October, it also signals Dexus’ confidence in the emergence of healthcare property as an institutional asset class.

To be known as the St Leonards Health and Education Precinct, the broader development could ultimately be home to around 85,000 square metres of healthcare-related real estate.

“It’s the start of us trying to create a world-class medical precinct,” Mr Steinberg said. “This will be a flagship development that will hopefully show how it’s done for other parts of not only Sydney but also in Australia.”

Dexus says the precinct will include a “medi-hotel” to accommodate the families of patients, along with housing for the precinct’s many healthcare workers. This housing, it says, would be developed through a build-to-rent model.

“When you see a need in an adjacent location that is complementary to what we are building it makes perfect sense to go down this path,” Mr Steinberg said.

“In this particular circumstance, there is a clear priority for that kind of key worker housing in that location.”

The landmark development is destined to be held in the Healthcare Wholesale Property Fund, a wholesale fund Dexus established two years ago through a joint venture with Adelaide-based developer Commercial & General.

The vehicle, seeded with about $370 million of properties on completion, including the new 12-storey 343-bed Calvary Adelaide Hospital, has won the backing of the Clean Energy Finance Corporation (CEFC) and Australian Ethical Investment (AEI).

Dexus recently announced it would target net zero emissions for its portfolio by 2030, which includes making energy savings in healthcare.

“The CEFC is an equity investor and sees enormous opportunity in healthcare for energy efficiency so it invested in our fund because they see that our expertise in offices and industrial can be overlaid into that sector and can provide some benchmarking,” said Paul Wall, head of group sustainability and energy at Dexus.

CEFC property sector spokesman Chris Wade added: “The healthcare sector is ideally suited to benefit from clean energy investments, and yet interest in improving energy efficiency in this area is long overdue.

“Healthcare facilities typically use far more energy than standard office buildings because they operate for extended hours, have high hot water consumption, and extensive air-conditioning and specialist medical equipment requirements,” he said.

Dexus plans to take full advantage of the project’s proximity to the North Shore private hospital—via a proposed bridge link—and the public Royal North Shore Hospital.

The $300 million facility will be anchored by Ramsay Healthcare and Genesis Care, which account for around half of the 16,000-square-metre building.

The building will boast more than 300 car spaces, including electric charging stations, along with premium bathroom, locker and storage facilities, high end food and beverage offerings, and an exclusive outdoor terrace.

Construction is forecast to complete in mid-2020.