Medical Commercial Property in 2026, What Makes a True Healthcare Asset, Plus Red Flags to Avoid

Medical assets keep getting called the gold standard of commercial property. Long leases, sticky tenants, and essential services. But the category is getting crowded with “quasi health” operators, and investors are still buying over rented deals that do not stack up at renewal.

What Happened

France from RWC Medical shared what he is seeing across the healthcare property market after more than a decade specialising in the asset class.

Key themes stood out:

• Demand has lifted post COVID as investors chase stable income similar to childcare.
• The market has shifted toward integrated health precincts, where multiple services sit under one roof.
• Value drivers differ by healthcare layer, and investors need to separate true healthcare from wellness style retail.
• Regional medical can look attractive on paper, but workforce shortages make tenant replacement harder.
• The easiest asset class to spot early red flags is also one of the easiest to overpay for.

Key Findings

1. Not all “healthcare” assets are healthcare

France drew a clear line between:

• Primary healthcare: GP clinics, the first point of patient contact.
• Secondary and tertiary healthcare: specialist services and higher acuity care.
• Allied health: complementary services often driven by GP referrals, like physio and rehab.

He warned against assets marketed as healthcare that are closer to large format retail, such as wellness concepts that do not sit in the patient care pathway.

2. Integrated medical precincts are getting bigger

The sector has moved from standalone clinics to multi service hubs: GP, radiology, pathology, pharmacy, allied health, and specialists in one facility. These precincts improve patient convenience and make the operator ecosystem stronger through internal referrals.

The scale has shifted too. Facilities that were around 2,000 sqm have grown into 4,000 to 8,000 sqm formats, with Australia trending toward larger international style health hubs.

3. Value drivers depend on the healthcare layer

France outlined different value drivers depending on the service type.

Primary healthcare (GP led) is driven by:

• Location
• Demographics
• Private health and income mix

A counterintuitive point was that premium inner pockets can underperform if the demographic is too healthy. A balanced catchment with higher incomes and a growing 55 plus population can be the sweet spot.

Specialists and procedural services are more location sensitive to:

• Proximity to hospitals
• Supporting infrastructure around hospitals

Post surgery and rehab also benefits from closeness to hospitals and medical centres because the patient journey continues after the procedure.

4. Regional medical has a hidden risk, replacing the tenant

Regional demand can look strong due to older demographics. But workforce shortages are the constraint.

France highlighted:

• GP recruitment into regional centres remains difficult.
• Policy settings can be misaligned, with “areas of need” definitions not matching real world shortages.
• If a tenant leaves, replacement can be far harder than metro markets.

The result is a risk profile that does not always match the initial yield.

5. You can check GP demand in real time, and you should

One of the most practical insights was due diligence you can do before buying.

France suggested reviewing:

• The clinic website for the current doctor roster.
• The live booking system to see appointment availability and how far doctors are booked out.

If a GP clinic only has two to three GPs, it is often not profitable due to overheads. Strong booking depth, like two to three days booked out, can indicate patient demand and referral momentum.

6. The biggest investor mistake, buying over rented medical centres

France called rent the big red flag.

Medical centres have a rent ceiling. If rent is above market, the business can struggle at renewal, and the investor can wear a sharp reset.

He also flagged pathology rights as a key issue:

• Who controls pathology income, the landlord or the GP operator
• Pathology can be a lifeline revenue stream for a GP clinic
• If pathology is separated from the operator economics, stability can weaken

Action Steps

1. Confirm it is true healthcare
   Map the tenant to primary, secondary, tertiary, or allied healthcare. Avoid deals dressed up as healthcare if they do not sit in the patient journey.
2. Benchmark rent to market
   Do not buy on headline yield alone. Stress test the rent against market evidence and renewal realism.
3. Check pathology rights
   Understand who controls the pathology tenancy and income flow, and how that impacts the GP operator’s resilience.
4. Do live demand checks
   Review appointment availability, booking lead times, and doctor numbers. It is one of the few sectors where you can observe demand signals before buying.
5. Assess fit out age and replacement risk
   A tired fit out can signal looming relocation or capex. In regional areas, replacement risk can be amplified.
6. Get the right team reviewing the lease
   Lease clauses can hide major risks. A proper review can prevent expensive surprises.

Final CTA

Want help assessing a medical or healthcare deal, including rent sustainability, lease risk, and tenant quality? Book a free discovery call and we will walk you through how to build a high growth commercial portfolio without the guesswork. Use the link in the show notes or visit investor.com.au to book your discovery call.