Gulf countries offering international investment opportunities in health care
Dubai - A shortage of hospitals, clinics and related infrastructure, along with an increasing population and official push to promote medical tourism, makes the health care sector in the Gulf region a promising area for investment.
The increasing emphasis on health care as part of economic plans is exemplified in the UAE Vision 2021 and Saudi Vision 2030. Both countries are promoting public-private partnerships to finance health-care projects.
“Dubai needs 1,000 hospital beds in the next five years just to keep pace with the growing population growth, which translates to seven hospitals, at around 150 beds per hospital,” said Craig Plumb, head of research at Jones Lang LaSalle MENA.
“At the same time, for investors looking for alternatives from the crowded residential, offices, retail and hotel sectors, health care is a promising area that is not well-developed or uniform across the region.”
Jones Lang LaSalle said health-care spending in the MENA region is expected to grow to almost $150 billion in 2020, with the Gulf Cooperation Council (GCC) accounting for approximately $70 billion of that figure — a compound growth rate of more than 12%.
Plumb attributed the main drivers behind this to growing populations, the need to match health-care spending as a percentage of GDP when compared to other developed countries, increasing prevalence of lifestyle diseases, mandatory health insurance policies being rolled out across the GCC by 2020 and a thrust in some countries such as the United Arab Emirates to develop health and wellness industries.
The UAE has been a huge growth story, with emphasis on infrastructure spending, job creation, tourism and real estate, Plumb observed. “It becomes harder to grow when you already have an advanced infrastructure in place,” he said. “The need then arises for quality soft infrastructure, like education and health care. With the pressure on government budgets, they are reaching out to the private sector to invest. We may very well see property trusts invest in the health-care sector.”
While acknowledging that funds not familiar with health-care industry may not be attracted to investing in hospitals, Plumb said great opportunities exist in areas such as clinics, pharmacies, diagnostic services, medical schools and training. “Already we are seeing clinics being incorporated into shopping malls and office complexes,” Plumb said.
The GCC is witnessing an expansion of health-care groups such as London-listed and Abu Dhabi-headquartered NMC Healthcare, which entered Saudi Arabia last year, acquiring a 70% stake in As Salama Hospital in Al Khobar. This year it is investing $40 million to acquire two multi-speciality hospitals in Saudi Arabia.
Dr Azad Moopen, managing director of Aster DM Healthcare, emphasised the role of the private sector in filling the health-care gaps.
“We see the private sector health-care players as crucial to bringing in the latest in innovation and international standards of care to meet local needs,” Moopen said. “Of course, the success of the private sector in any industry is maximised by having strong governmental partners.”
He said governments in the region were far-sighted and saw the value in the public-private partnerships to achieve ambitious goals. Health care has been positioned as a priority sector by many governments in the GCC “to achieve their vision of world-class medical care,” Moopen said.
The ageing population and prevalence of lifestyle diseases, such as diabetes and hypertension, along with a huge increase in obesity, “will prove to be a big toll on health-care sector if not addressed properly,” he added.
Aster DM Healthcare Group, which has been present in GCC countries for 30 years, operates nine hospitals in the GCC, 87 clinics and 202 pharmacies. “There are four more hospitals in the pipeline and many more clinics and pharmacies to be opened in the near future. We see the prospects for health-care business opportunities in some of the undersupplied countries in the region,” Moopen said.
International and multispecialty health-care groups such as Mediclinic Middle East and Cleveland Clinic Abu Dhabi already have a position in the UAE. Last month, the world-renowned teaching hospital King’s College Hospital London expanded its UAE footprint by opening a state-of-the-art, Dubai-based medical centre. It also operates a medical centre in Abu Dhabi.
The King’s College Hospital UAE is backed by the Al Tayer Group, Dubai Investments Industries and Ashmore Group.