Hospitals push up rents and help drive capital growth.
Higher quality tenants
Good suburbs don't only attract more people; they also attract higher quality tenants.
Popular communities have lots of services and infrastructure. Think schools, parks, businesses, public transport and hospitals. These services make the area an attractive place to live. As more people find an area attractive, property and rental prices rise.
Good suburbs don’t only attract more people; they also attract higher quality tenants. Higher quality tenants mean less risk, more long term tenancies, high rents and better returns.
This is why it always makes sense to buy property in suburbs that have excellent services and infrastructure, like hospitals.
Hospitals, however, have two additional advantage for property investors. They employ a lot of people, and draw a consistent supply of people who need to stay near by.
Large hospitals operate 24/7, and while the regular 9-to-5 worker may be happy to waste an hour each way travelling to work, shift works are less inclined to. After a gruelling night shift, the last thing you want is to spend an hour on the train. Hospitals provide an ongoing supply of fully employed people looking to rent in the local area.
There is also a lot of short term accommodation offered around hospitals for families or patients who need to spend extended periods receiving treatment. This takes some of the long-term housing supply out of the market, and increase the price of whatever is left.
Both factors help raise rents.
Higher rent is will obviously give you more income in the short term, but if maintained, it will also drive capital growth in the long-term. Investors will always be attracted to quality areas, with high rents.
While no investment should be made purely on the basis of a single factor; such as the proximity to a hospital, it should be something to consider in conjunction with other relevant information.
In the short term, you should expect to pay more for high yielding areas. While it may be okay to pay a premium for a quality asset that will provide you with higher returns, you always need to balance out the cost vs benefits.
If you’re looking to make a real estate investment, consider suburbs around a hospital. There will most likely be higher rental demand which increases your yield and keeps prices growing.