Japan's Ageing Population and Healthcare REIT

It is no secret that Japan is facing a demographic time bomb with shrinking birth rate and rising proportion of ageing population. To put things into perspective, 1 in 3 Japanese will be over 65 by 2050.

Ageing population translates into sustainable or higher demand for healthcare related services such as hospital and nursing care homes or facilities. When I think of Japan's ageing population, one of the healthcare REIT that could stand to benefit from this demographic is Parkway Life REIT, a healthcare REIT listed in Singapore Stock Exchange.

Parkway Life REIT derives 62% o its rental income from Singapore hospitals i.e. Mount Elizabeth Hospital and Gleneagles Singapore etc. 37% of its rental income is derived from its 40 high quality healthcare related facilities such as nursing homes in Japan while the remaining 1% is derived from Gleneagle Intan medical centre along in KL.

Parkway Life REIT ventured into Japan in 2008 during Global Financial Crisis, has since accumulated around 40 properties in Japan. Rental income from its Japan portfolio is denominated JPY and the Japan properties are covered by earthquake insurance policy on a nationwide basis.

In addition, its nursing homes are located across various cities such as Hokkaido, Osaka, Fukuoka and more. 

In the long term, demand for healthcare services and nursing home is likely to be on the rise, placing Parkway Life REIT in the sweet spot, hence anchoring its ability to generate sustainable cash flow to shareholders.

While this is not the next killer stock that will give extremely high returns, but it could be suitable for income investors who wants to build SGD income stream.

Since IPO in 2007, its distribution per unit has grown by average 10% from 2007 to 2016 which is not an easy feet. Higher distribution per unit implies a sound fundamental REIT.

Hence, this is one of the REITs that I believe will be the direct beneficiary of Japan's ageing demographic situation. 

Note: I do not own shares in this REIT, the above sharing is merely for education purposes.