Clocking in at an estimated AUD$2.3 billion (US$1.8 billion), the new Royal Adelaide Hospital (nRAH) is one of the 10 most expensive buildings in the world, outstripping iconic global landmarks like The Shard in London and the Burj Khalifa in Dubai.
Set to open in September 2017, itis the centrepiece of the AUD$3.6 billion (US$2.7 billion) Biomedical Precinct along Adelaide CBD’s North Terrace that also includes the South Australian Health and Medical Research Institute (SAHMRI – opened in 2014), Adelaide University’s Health and Medical Sciences building (opened in February 2017), UniSA’s Health Innovation building (under construction, expected in 2018) and SAHMRI 2 (expected in 2020).
When considering that the population of South Australia is a modest 1.71 million people and is growing at an even more modest annual rate of 0.6 per cent, the nRAH could seem a little disproportionate. However, the provision of health services to the local population is only part of the story. The key expectation is that the Biomedical Precinct will be the catalyst for sector agglomeration, and an opportunity for Adelaide to emerge as a regional hub for bio-technology and health research innovation.
Adelaide’s expanding profile as an Asia Pacific regional medical innovation hub is expected to underpin strong white collar health sector growth which, in turn, will boost CBD office demand. Even now, employment within the sector is trending upwards. In the 12 months to February 2017, the Australian Bureau of Statistics recorded an increase of 2,600 jobs in the health and social services sector in South Australia. Looking forward, Deloitte Access Economics forecasts that white-collar health sector growth will increase by 8.6 per cent to the end of 2017 and average 2.4 per cent annualised growth over the subsequent five years to 2022 (figure 1).
The attractiveness of the Adelaide CBD as a regional health technology hub is underpinned by the affordability of high quality office accommodation for occupiers. As at Q1 2017, average prime gross effective rents are AUD$269 per sqm per year, reflecting a 45 per cent occupancy cost benefit to Melbourne CBD (AUD$390 per sqm per year) and a 219 per cent occupancy cost benefit compared to Sydney CBD (AUD$875 per sqm per year).
The comparative affordability of prime office space in Adelaide, coupled with access to world class medical and research facilities, provides a platform for the growth of local and regional start-ups and small cap medical tech firms, and may set a foundation for a future biotech cluster in the city.
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