Growing opportunity for more real estate investment in the healthcare sector across the UAE – says JLL
According to a new report by JLL, there are opportunities for investors and other real estate players in the healthcare market.
The report, called Healthy Returns, highlights the opportunities for investors and other real estate players in the healthcare market across MENA over the next five years as the region responds to an ageing population and increased demands for hospitals and other healthcare facilities.
“With the current shortage of hospitals, clinics and other healthcare facilities, an ageing population and the rise of medical tourism, there is a pressing need for additional healthcare facilities in the region over the coming years. To merely keep pace with the forecast population growth will require investment in around 70 new hospitals in the five major cities across the region,” said Craig Plumb – Head of Research, MENA – JLL.
“Given current and future constraints in government spending, it is widely recognised that the ambitious plans to improve healthcare provision in the region will depend upon attracting greater private sector investment.”
The JLL report states the population of the MENA region is ageing quickly. The number of people aged over 65 years is forecast to increase by 4.4% pa over the next five years, more than twice the increase in the overall population (1.9% pa). As a result, the number of people over 65 years will increase from 21 million to 26 million by 2020.
To maintain the current provision rate of hospital beds per person would require the creation of 10,500 additional hospital beds in the five major cities across the region (Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo) over the next five years, which equates to 70 additional hospitals, says the JLL in a statement.
“It is evident that the demand for hospitals and healthcare facilities is rapidly increasing in the region, driven by a combination of an ageing population and the growing attraction of the region for medical tourism,” said Mr. Plumb.
The JLL report says developers of large planned communities in the region are already recognising the need for more healthcare provision, and are incorporating clinics and other non-specialist facilities in their developments.
Structural changes in the delivery of healthcare is also creating further opportunities for real estate players. Plunging oil prices have highlighted the need to attract more private sector investment as an alternative to financing healthcare facilities from government budgets.
One tool likely to be increasingly used are Public Private Partnerships (PPPs), which shifts the financial burden of project funding from the public sector to the private, relieving pressure on government spending and freeing up resources to spend on other priority projects, says JLL.
Healthcare facilities in the MENA region fall under three broad categories - medical cities, hospitals and medical centres - depending on the scale of demand and the availability of land.
A number of regional governments, particularly the Kingdom of Saudi Arabia, the United Arab Emirates and Oman, have invested heavily into mega healthcare projects, hosting numerous hospitals as well as other facilities, including rehabilitation centres, research and training facilities. Given the high level of capital investment, several of these projects are now seeking PPPs to attract private sector investment for future development phases, says the property consultant in a statement.