Vision & Strategy For MENA Healthcare

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Healthcare MENA Spending

As countries progress economically, healthcare spending per capita also rises at a proportionate level. The world spending on healthcare is expected to increase from close to US $ 8 trillion in 2013 to close to US $ 18 trillion in 2040 in purchasing power adjusted dollars. Healthcare MENA spending is expected to grow to close to US$ 150 billion in 2020. Zooming into the GCC, it will account for approximately US$ 70 billion of this spending which would be a compounded annual growth rate of over 12 %, one of the highest for any part of the world.

Main MENA Healthcare spend drivers

The demand for quality healthcare facilities in the MENA region has been growing dramatically. Some of the main drivers for this are:

  • The growing population, over the last six years, the population of the MENA region has increased by 1.9% per annum, to reach approximately 470 million, this is well above the global average of 1.1%. An Ageing population acts as a further contributor to the MENA healthcare spend
  • A need to increase healthcare spend as a percentage of GDP.
  • The increasing prevalence of lifestyle diseases are expected to continue to drive the demand for healthcare services across the MENA region.
  • The development of the Health Insurance Sector, including governments making health insurance mandatory across the GCC by 2020 which will act as a significant driver of further private sector investment.
  • A significant thrust by some of the countries in this region to develop a Health and Wellness Industry. Dubai welcomed approximately 14.9 million tourists with a target of 20 million visitors by 2020. As these numbers continue to grow the wellness industry will help increase the average length of stay in the city thereby constituting as a significant contributor

Regional Healthcare Initiatives

In response to this we have seen a number of large scale healthcare driven projects both planned and under development. Regional governments recognising the need for this in the long term development of their nations have supported and invested in MENA healthcare.

Dubai in particular has been ahead of the curve when it comes to setting up healthcare infrastructure. For e.g. Dubai Healthcare City the healthcare free zone was launched 15 years ago.

More recently the Dubai Government has also put in place a ‘future accelerators’ program across a myriad of industries by pairing global talent and technology companies with government organisations to provide transformational solutions. In healthcare one such initiative was the possibilities of 3D manufactured prosthetic limbs, further seeding a very innovative approach towards healthcare solutions.

There has also been a significant investment by the private sector in MENA healthcare, recognising the long term opportunity of this real estate asset class. Within some of the larger freehold markets of Dubai and Abu Dhabi, targeting an ever more sophisticated buyer- audience of international buyers, developers of large master planned communities are positioning clinics and non-specialist healthcare facilities in their developments to add further value to the overall mixed use development.

The path ahead

Going forward with the realities of 2017 oil prices at very different levels from a few years earlier, there is likely to be an increased role of Public Private Partnerships (PPP) to finance healthcare MENA projects as against just the Government. There have been numerous such projects that have taken shape successfully in countries across Europe, and North America.

Some regional governments have already moved forward very quickly in this regard. Dubai introduced a PPP law in September of 2015 and the UAE Cabinet has approved a resolution for partnerships between federal entities and the private sector earlier this year. Similarly Saudi Arabia has identified that PPPs will also play a major role in its ambitious Saudi Vision 2030 launched in April 2016. These initiatives will act undoubtedly as a catalyst in the next few years for various infrastructure sectors including healthcare.

The investment costs in hospitals range between US $ 700,000 to 1.1 million per hospital bed, creating a significant entry barrier for new entrants into these projects. Going forward further incentives would need to be initiated including tax incentives to attract further institutional and international players especially in areas of specialisms such as cardio vascular care and cancer treatment.

Another area that needs to be addressed as the healthcare MENA industry grows a lot further is the need to have world class medical universities in the Middle East which would provide the human capital needed for regional growth to be sustained.

Whilst a lot of the GCC and wider MENA region is still able to attract expatriate talent in the medical profession, going forward it would be a lot more sustainable to have this talent home grown from the large youth populations that would enter the workforce in the coming years. A field that would need to grow hand in hand with this is investment in medical research that forms a significant part of investments by governments of the G – 7 as well as G – 20 countries.

The MENA region has undoubtedly made significant strides in a relatively short period of time in the healthcare sector and with the continued focus in addressing the challenges by regional governments, the outlook for this sector continues to look upward.

Our Health Returns report details the opportunity for regional investors. Download it here.

JLL Healthcare MENA Services: Our highly experienced team of real estate consultants can advise you on all aspects of MENA healthcare related property, whether from an operator, developer or investor perspective. Our expertise covers the full range of healthcare related real estate including, sheltered housing, retirement villages and assisted living, hospitals, polyclinics and family health centres, as well as wellness centres and bio-medical business parks and even bio cities. Contact our Healthcare Consultants for more information.

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Chris Francis

Author: Chris Francis

Chris Francis heads JLL’s Healthcare and Education vertical within the Middle East and Africa region and has advised on numerous mega projects. He can be contacted at chris.francis@eu.jll.com

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