JLL: Robust future seen for MENA, Dubai healthcare markets

The rapidly-ageing Middle East and North African population will drive demand for hospitals and healthcare in the region, according to a report by JLL, the New York Stock Exchange-listed, Chicago-based real estate specialist.

The report, which JLL released to coincide with a recent Cityscape Global property event in Dubai, notes that the so-called MENA region “remains below more developed economies when it comes to per capita spending on healthcare and the provision of hospital beds”.

The report, called Healthy Returns, highlights what the JLL researchers say are the opportunities for investors and other real estate players in the healthcare market across the MENA region over the next five years, “as the region responds to an ageing population and increased demands for hospitals and other healthcare facilities”, according to a summary of its findings.

Craig Plumb, JLL’s MENA head of research, said that given “the current shortage of hospitals, clinics and other healthcare facilities, an ageing population and the rise of medical tourism” in the MENA region now, there will be “a pressing need for additional healthcare facilities [there] 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,” he added.

“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 notes that the number of people aged over 65 years in the region is forecast to increase by 4.4% per annum over the next five years, more than twice the rate at which the the overall population is expected to increase (1.9%).

As a result, the number of people over 65 years of age there “will increase from 21 million to 26 million by 2020”.

And to maintain the current provision rate of hospital beds per person, it adds, some 10,500 additional hospital beds in the five major cities across the region (Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo) will need to be added over the next five years, “which equates to 70 additional hospitals”.

It continues: “The per capita spending on healthcare in the UAE alone is only 17% of what is being spent in Switzerland, for example, and MENA has an average of only 1.9 beds per 1,000 population, in comparison to an OECD average of 4.8 beds.

“Governments across the region have recognised the need to increase the level of healthcare provision, and there is therefore strong government support for creating more hospitals and other medical facilities.

“To achieve the same provision of hospital beds as currently available across OECD countries would require a staggering 470,000 additional beds, which equates to 3,130 new hospitals to be developed across these same five major cities by 2022.”

Growth of private investment

Another key finding highlighted in the JLL report is that “structural changes in the delivery of healthcare” is also taking place in the MENA region, and as it does, additional opportunities for private investors are being created.

This is coming at a time when continued low oil prices have driven many of the region’s oil-dependent governments to look for ways of attracting more private sector investment, to supplement their depleted government coffers.

JLL’s Plumb observed that these constraints on public spending have resulted in “most governments across the region seeking to transfer the process of providing healthcare to the private sector”, as they also actively seek “to attract more private sector investors and operators into the sector”.

He noted that a number of regional governments, including those of Saudi Arabia, the United Arab Emirates and Oman, had “invested heavily into mega healthcare projects, hosting numerous hospitals as well as other facilities, including rehabilitation centres, research and training facilities” in recent years.

“Given the high level of capital investment, several of these projects are now seeking PPPs to attract private sector investment for future development phases,” he added.

JLL is the corporate name for the entity formed by the merger in 1999 of Jones Lang Wootton and LaSalle Partners.

To see an online presentation of the JLL report, which includes information about how to obtain a copy of it, click here. 

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