Funds manager and developer group Centuria Capital has kick-started the development of its latest project, a $75 million private hospital in Melbourne’s east as it builds a $1.7 billion portfolio in the booming healthcare sector.

Construction of Adeney Private Hospital will be operated by a doctor-led joint venture with Medibank’s Amplar Health business, covering 4696 square metres and located on the corner of Adeney Avenue and Cotham Road in the eastern Melbourne suburb of Kew.

A render of the Adeney Private Hospital, on the corner of Adeney Avenue and Cotham Road in Kew.

The new hospital replaces a decommissioned 1970s hospital on the same 209 Cotham Road site, which was demolished in May 2022.

Centuria Prime Partnerships (CPP), a joint venture between Centuria and an investment vehicle sponsored by Morgan Stanley Real Estate Investing, is developing the property and will retain ownership on completion in mid-2024.

Centuria Healthcare managing director Andrew Hemming said the hospital would aim to align the interest of patients and operators and create more “cost-effective and care-oriented outcomes”.

“Centuria has worked closely with the operator to design a fit-for-purpose property that caters to modern healthcare procedures, including specifically curated operating theatres and recovery spaces to maximise operational efficiency,” Hemming said.

The operator has committed to a 20-year lease and the Victorian-based construction company, Hansen Yuncken, is the appointed building contractor.

Healthcare real estate has grown into a mainstream sector with Dexus, Charter Hall, the HomeCo business’s newly listed HealthCO Healthcare & Wellness REIT, Elanor Investments and Queensland Investment Corporation (QIC) all investing in a range of private hospitals, mental health facilities and diagnostic imaging.

In Sydney, Centuria has also invested in The Bond project — a next-generation timber building by Mulpha at Norwest to add a critical service extension to the adjacent Norwest Private Hospital and meet the growing demand for health and medical services in the Hills district.

The Bond, on the corners of Elizabeth Macarthur Drive and Norbrik Drive, is the first of three planned healthcare and commercial buildings developed by Mulpha. It has a ground floor retail environment, six floors of commercial office space and a childcare facility, along with parking and end-of-trip facilities.

Centuria has bought the largest eight strata titles within the seven-storey building, taking a significant ownership position within the development and ultimately the Norwest precinct.

Hemming said the investment reflected Centuria’s criteria of owning “fit-for-purpose real estate that is tailored to our tenant clients’ needs” and that can be adapted in the future for newer equipment, robotic procedures or the latest sterilisation plant and equipment.

Mulpha’s head of developments, Tim Spencer, said the cutting-edge building would be developed by Buildcorp, with completion due in the first quarter of 2023. The site will be purpose-built with cross-laminated timber and has the potential to be carbon-neutral, which he said was “something increasingly attractive to blue-chip clients”.

“For patients, it means they have a more comprehensive one-stop shop for their healthcare needs where they don’t need to travel too far for multiple specialist treatments,” Spencer said.

Mulpha will soon lodge a development application for the next stage of this project that will cover 19,000 square metres within two more purpose-built health and commercial buildings.