Even though Saudi Arabia is taking initiatives to open up its healthcare sector by encouraging more private sector participation, the extent of investment required is significant.
One way of bridging the required investment is by way of creating more real estate investment trusts (REIT), according to Colliers.
A new Colliers report estimates that Saudi Arabia will require approximately 19,000 – 20,000 additional beds by 2030. But the high cost of land and limited funds available for capital expenditure, especially for the construction of hospitals, is hindering this expansion. The investment required is approximately $33.8 - $36.5 billion.
"REIT funds in the Kingdom can unlock around $59.0 - $63.4 billion property value from the private sector, thereby playing a key role in augmenting growth in the healthcare sector," the report from Colliers Healthcare Advisory & Valuation Services team said.
This would provide a surplus amount of up to $27.8 billion which can be used to upgrade the existing hospitals, according to the consultancy.
The expansion of REITs in the kingdom is also expected to offer investors more diversification, transparency and greater accessibility to local real estate.
In addition, retail investor, who are looking for predictable income streams from real estate assets, can also benefit from REITs, the report said.
(Reporting by Brinda Darasha; editing by Seban Scaria)