[+] ‘Untapped, Misunderstood’: Developers Eschew Social Infrastructure Opportunities

It’s an asset class worth $40 billion in south-east Queensland alone, but social infrastructure projects are failing to lure private developers. Red tape and complex public-private funding models are discouraging developers looking to capture the health and education asset classes, as well as a perception that the market is yet to reach maturity. The Property Council of Australia commissioned research into the underfunded asset class, which reveals there are newly seeded social infrastructure-focused funds with about $10.5 billion in managed assets, most of which have a weighted average lease expiry of 10 or more years. But there is a fly in the ointment. Property Council Queensland deputy executive director Jess Caire says there is an underlying perception of social infrastructure as an “emerging” asset class, which is limiting private developers’ appetites for projects. “The general lack of understanding around social infrastructure—and the fact it’s often defined as an emerging asset class—means much-needed community projects fail to attract investors,” Caire says. “The current pipeline of health and education projects in south-east Queensland is worth $9.3 billion. During the past 25 years, two in every five new jobs were in the health and education sector. Social infrastructure presents enormous opportunities, but it’s often untapped and misunderstood.” ▲ Griffith University was in talks with the State government for its proposed $1-billion CBD campus on the Brisbane Live site. Caire says more needs to be done to educate developers on the lucrative sector, which is being largely overlooked. “With more than half of the current social infrastructure projects being funded and delivered by the private sector, more needs to be done to promote the opportunities and educate the development community on the partnership opportunities available to them in delivering these vital projects,” she says. Catholic Archdiocesan Services director of property and building Patrick Lane-Mullins is the former chair of the Property Council’s social infrastructure committee. Lane-Mullins says the scale and integral nature of the asset class should attract investors to the long-term stability of social infrastructure, which he says “rivals institutional investment portfolios”. “Social infrastructure assets typically have longer lease terms than traditional investment grade assets, which has resulted in social infrastructure-focused funds being established, representing around $10.5 billion in managed assets,” he says. “That said, not all investors are aware of this and still view the sector as being on the periphery of mainstream investment options due to the different funding models that underpin the sector. “The opportunity to partner with non-government providers to deliver crucial projects that make a real difference in the lives of Queenslanders needs to be highlighted to the development sector.” Of course there are some institutional investors already playing in the market, particularly in health. ▲ Australian Unity executive general manager Ryan Banting says the fund has pivoted its portfolio towards social infrastructure assets. The Urban Economics report on social infrastructure suggests the rise of private institutional investment in healthcare assets is indicative of a mature asset class. Australian Unity developed the $340-million Surgical Treatment and Rehabilitation Service at the Herston Quarter. The 184-bed facility was the first public hospital in Australia to be funded by private investors in a property trust. Australian Unity executive general manager Ryan Banting says Australian Unity recognised the opportunity in the market and could see the development potential in social infrastructure as an asset class. “We’ve pivoted our property portfolio towards social infrastructure knowing there is a big future here that can deliver multiple outcomes simultaneously. It can meet community needs, create job opportunities and provide attractive returns for our investors,” he says. “Partnering with government through innovative delivery models creates significant economic and community benefit.” Australian Unity developed the Herston Quarter in Brisbane’s Royal Brisbane and Womens’ Hospital health precinct in partnership with the Queensland government. “Based on facilities completed to date, it is estimated that Herston Quarter has already created $650 million of community benefits per annum and generated an economic contribution of $128 million,” Banting says. “Continuing to showcase partnerships such as these, while spotlighting the enormous contribution social infrastructure makes economically and to our broader community, should be a key focus for decision makers. “Our vision for the growth of the social infrastructure sector includes health and education assets, but also includes investment in aged care, retirement living and specialist disability accommodation.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. 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[+] ‘Untapped, Misunderstood’: Developers Eschew Social Infrastructure Opportunities

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[+] ‘Untapped, Misunderstood’: Developers Eschew Social Infrastructure Opportunities

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