Mercy Health has divested one of its former Aged Care homes located in Springvale South. The subject property located at 470-476 Springvale Road, Springvale South was operated as a residential aged care home until late in 2021 and featured 42 single rooms.
CBRE’s Australian Healthcare and Social Infrastructure team of Sandro Peluso, Marcello Caspani-Muto and Jimmy Tat handled the expressions of interest campaign which saw the property transact at well above both reserve and valuation levels.
Transacting for an end sales price of $5,500,000 the process was highly competitive with multiple offers having been received for the asset.
The property was located within one of Melbourne’s most diverse geographic locations and featured a large underlying land offering of 3,929 sqm* with single level improvements of 1,551 sqm*.
Marcello Caspani-Muto said “The momentum for the sale of these vacant aged care homes only continues to grow as more potential purchasers begin to better understand the market and the conversion potential of these homes for alternate uses like healthcare. Couple this with rising construction costs and we continue to see owner occupiers, investors and institutional buyers opting for refurbishment and extension projects as opposed to new build”
“While these groups may be paying a premium to an as is valuation they remain significantly better off financial at the end-use stage of the project with new build aged care construction costs now average up to $400,000 per bed.”
Jimmy Tat added “Depending on the age, quality and maintenance history, there are opportunities for investors or owner occupiers to secure these assets at below-replacement cost. It is positive to see such strong investor interest both locally but also internationally, with global groups willing to purchase these properties vacant possession and take on the longer term leasing risk given the upside they associate with the improvements.