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    Mar 18, 2014

    Medical suites looking good to investors

    MEDICAL suites, a sub-segment of the commercial property market, are coming onto the radar screens of investors, who are seeing the niche field as an alternative asset class.

    These commercial properties, meant for medical usage and traditionally sold mainly to doctors, have seen rising interest from investors, according to consultants that BT spoke to.

    Although there are no official statistics on the proportion of buyers who are non-doctors, anecdotal statements by some developers suggest that around 30 per cent of new suites being developed are going to investors.

    "Medical suites are commercial properties, they are untouched by cooling measures," said Ms Mary Sai, executive director at Knight Frank. "Long term, they are also good investment assets."

    There are currently around 1,400 medical suites in Singapore, according to estimates by Knight Frank and Jones Lang LaSalle (JLL).

    Some of these units, such as those in Camden and Paragon medical centres, are only for lease. A few others, which are part of hospitals such as Gleneagles and Mount Elizabeth, are open for sale only to doctors to curb speculative investment, said Parkway Pantai, which operates both hospitals.

    Prices of these suites, usually sub-1,000 sq ft in size, have been trending upwards over the years. According to URA caveats, the average price of medical suites at Mount Elizabeth Hospital last year was around $7,100 per sq ft, over 40 per cent higher than the $5,000 psf average in 2010.

    "The growth in the overall medical industry has been driving prices up," said Mr Karamjit Singh, head of investments and residential at JLL. "The fact that there are established centres means there's always going to be a premium for being housed in an established centre."

    Traditional property developers have started taking an interest in the industry as well, with at least five new mixed developments - housing around 500 medical suites or over 35 per cent of current supply - to be ready by 2018.

    These new units, which were going for around $4,000 to $4,500 psf in the past year, can be bought by doctors and investors, but end usage must be for medical purposes.

    The first of these to open is Connexion located above Farrer Park MRT station. The mixed development - comprising a hotel, hospital and 189 medical suites - will open in stages from the second quarter of this year.

    The take-up rate has been strong, with some 98 per cent of its medical suites sold, said developer and manager Farrer Park Company.

    Far East Organization, which is developing the upcoming SBF Center, has seen similar success, with just one of its 48 medical suites left for sale.

    SBF Center, located in the central business district, also has office space.