JLL released a report called 'Healthy Returns', highlighting the opportunities for investors and other real estate players in the healthcare market.
Dubai would need at least 1,000 hospital beds or seven new hospitals over the next five years to keep pace with the growing population and meet global standards in the healthcare sector, said Craig Plumb, head of research, Mena - JLL (Jones Lang LaSalle) at Cityscape Global. JLL released a report called 'Healthy Returns', highlighting the opportunities for investors and other real estate players in the healthcare market across Middle East and North Africa (Mena) over the next five years as the region responds to an ageing population and increased demands for hospitals and other healthcare facilities.
"At present, Dubai has 2.1 hospital beds for every 1,000 residents. This is way below the target of achieving the Organisation for Economic Co-operation and Development [OECD] average of 4.8 beds per 1,000 people. OECD is a group of high-income economies with a very high human development index and are regarded as developed countries," Plumb told Khaleej Times.
"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," he said.
The shortage in hospital beds is prevalent in the region. According to JLL, the Mena region is lagging behind more developed economies in terms of both per capita spending on healthcare and provision of hospital beds. The per capita spending on healthcare in the UAE is only 17 per cent of what is being spent in Switzerland, and Mena has an average of only 1.9 beds per 1,000 population in comparison to an OECD average of 4.8 beds.
"The region has an ageing population - the number of people over 65 years is predicted to increase by 4.4 per cent on average in the next five years. 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 over the next five years which equates to 70 additional hospitals," the report noted.
Plumb said the shortage is most acute in Saudi Arabia, where hospitals are mostly owned by the government and there is a need for private capital to pour in. The situation is unlike in Dubai where the private sector has already made heavy investments in the health sector.
Plumb sees strong demand and government support for the healthcare sector as a big opportunity for real estate investors to be more involved in the healthcare industry.
"The strong demand and current shortage of hospitals, clinics and other healthcare facilities makes this one of the most attractive sectors of the Mena real estate market for investors, developers and contractors to consider over the next five years," he said.
According to the JLL report: "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 over the next five years, and assuming a typical ratio of 150 beds per hospital means there would be a need for around 70 additional hospitals. To increase the provision of hospital beds in line with the current OECD average of 4.8 beds per 1,000 people, a staggering 470,000 additional beds would be required, which equates to 3,130 new hospitals, to be developed across these same five major cities by 2022.
"While hospitals are extremely specialist real estate assets and are not likely to appeal to all real estate investors, clinics and other less specialist medical facilities can be successfully incorporated into more generic forms of real estate such as office buildings and retail malls," said Plumb.
He noted that returns from traditional sources such as residential, retail or hospitality are falling and that opportunities from healthcare real estate are more stable and secure in the long run."Real estate developers cannot operate hospitals and similarly hospitals are not property developers but the two skills sets can be combined to address the growing need in the healthcare industry," Plumb emphasised.
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