Tight supply lifts prices of medical suites

A NEW property boom has taken off quietly in Singapore, in the niche market of medical suites.
Prices of these suites have jumped by up to 45 per cent over the last 18 months. Rents are also up substantially.

This comes as specialist doctors catering to the growing medical tourism market are snapping up units in medical centres such as Novena, Mount Elizabeth and Gleneagles.

‘There is a shortage of (medical) centres that is becoming more pressing every month,’ said ear, nose and throat specialist Yeoh Kian Hian, who bought three units at Novena Medical Centre.

The shortage of medical suites appears to have been caused by a combination of factors, including limited land supply near hospitals. This land may not be approved for medical centre use, market watchers say.

In general, medical suites should be near hospitals in case patients need to be warded for major surgery - or they should be purpose-built, with in-house services such as radiology and laboratory facilities.

The purpose-built centres for medical suites may need corridors and lifts wide enough to accommodate trolley beds, for example.

This boom in demand could spark more construction of this type of office building, although this depends on suitable land being available, market watchers say.

Still, they say more medical centres and hospitals are needed if Singapore is to achieve its aim of attracting a million foreign patients a year by 2012.

A total of 374,000 foreign patients came here last year, a hefty 23 per cent rise over 2004.
Singapore has new hospitals in the pipeline, such as Yishun Hospital.

Mr G.L. Yap, executive director (property services) of Far East Organization, said: ‘Three years ago, when we talked to people in the medical industry, the indication we got was that there was a shortage of medical suites.’

The firm has built Novena Medical Centre, set to be opened next year above Novena MRT station.

It has sold 76 of the 108 Novena Medical Centre units available for sale. It is keeping 37 units for lease, and last week leased out part of the centre’s eighth floor to a radiology clinic operator Medi-Rad Associates.

Far East has raised prices of its medical suites at Novena to $2,300 per sq ft (psf) from just $1,600 psf when they went on the market early last year.

Colorectal surgeon Francis Seow-Choen is one who bought a unit at Novena.

And while he waits for it to be ready, he is renting a unit at Mount Elizabeth Medical Centre, where rents have risen to between $10 and $12 psf, from about $8 psf two to three years ago.

Other purpose-built suites for sale include the 214 and 160 suites attached to both Mount Elizabeth and Gleneagles hospitals, respectively.

There are also lease-only suites at Camden Medical Centre, Mount Alvernia Hospital and malls such as Paragon.

Paragon, right next to Mount Elizabeth Hospital, has converted four floors of office space to medical suites in the last two years, so it now has 11 floors of medical suites.

Demand is so strong that it added one more floor this year - and that has already been snapped up.

Rents for medical suites at Paragon are now up to $8.50 psf from $7-$7.50 just a year ago.

Medical suites at Mount Elizabeth - with 70 years of lease left - have risen in price from an average of $2,200 to $2,300 psf for most of last year to about $2,500 to $2,600 psf late last year.

This year, a deal for an 829 sq ft unit was done at a whopping $3,983 psf. ‘The high price is not unusual because supply is very limited,’ said property firm DST Associates sales director Megan Chua.

‘Most medical suites are running at full capacity. It’s market forces at work,’ said Mr Donald Han of property consultancy Cushman and Wakefield.

Source : Straits Times - 5 Oct 2006