With the cost of building new aged care homes reaching $400,000 per bed, private investors are snapping up vacant aged care properties to renovate or reposition in order to receive stable, long-term yields and land tax exemptions, particularly in NSW and Queensland, according to a new report.

Tenants can be aged care providers, but also affordable housing, NDIS accommodation, or private hospitals.

Leading property specialists CBRE says they sold 10 vacant aged care homes in 2023, compared with five in 2021 in their 2024 Seniors Living Report.

A 100-bed aged care property in Donvale, Melbourne, formerly a Bupa home, recently sold for $12 million. The estimated renovation cost was $6 million, but CBRE estimates the replacement cost for the building at $31 million, showing the inherent value potential in vacant aged care property transactions.

But with development costs rising, there will soon be a shortage of aged care beds, CBRE warns. 

"With almost no new development occurring nationally" more Government support is needed "to avoid a dramatic aged care home shortage in the coming years," they note.

CBRE also says that with aged care's profitability under pressure – 66% of aged care homes are operating at a loss according to the latest StewartBrown data – retirement living operations on the same site can provide a buffer.

"Many generational care providers who combine both aged care and retirement services in a single location have praised the success and profitability of their retirement operations claiming it is the cause for the continued overall profit and viability," the report notes.