Boronia aged care investment sold off-market on c5pc yield

A Singaporean investor has paid $11.3 million for a 70 bed aged care facility in Melbourne’s outer east.

The Boronia asset at 7 Coogee Street is trading on a c5 per cent yield.

Medical and Aged Care Group is on a long-term lease for the 6300 square metre block.

The General Residential zoned parcel could have attracted townhouse builders.

CBRE’s Healthcare and Social Infrastructure’s Jimmy Tat, Marcello Caspani-Muto, Sandro Peluso and Josh Twelftree brokered the off-market deal.

The agents said the eventual sale price – well over a million dollars more than was expected – reflected the “particularly aggressive investment sentiment toward opportunities within this [freehold aged care] space”.

Boronia is about 29 kilometres from the city.

Passive investors aggressive for government-supported sector

Mr Caspani-Muto said “for a segment of the market that has been chronically undervalued in years gone by, there is a strong buyer pool developing”.

The government funds about 72 per cent of revenue for the aged care sector.

Twenty per cent of Australia’s population is forecast to be aged over 65 by 2037.

That compares to 15 per cent today, the executive said.

Leaving aside the Boronia deal, Mr Tat said average yields for freehold aged care investments circle between 7 and 8 per cent – but that he expects that figure to tighten over the next 12-18 months.

The 6300 square metre site, 29 kilometres east of the Melbourne CBD, is zoned General Residential.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of