Funding for private healthcare projects in UAE often limited to established players

As the delivery of healthcare in the Middle East and North Africa (MENA) region continues to evolve, the real estate and operational needs of healthcare providers becomes increasingly complex. Trends and industry changes require investors and operators of healthcare facilities to make challenging decisions including how to fund their healthcare projects and whether to open their doors to medical tourism in order to increase revenue.

Mansoor Ahmed, Director, Developmental Solutions, Colliers International, Abu Dhabi, UAE, will be speaking on this topic at the International Medical Travel Conference and Exhibition (IMTEC 2014) held on 5-6 March 2014 at the Dubai International Convention and Exhibition Centre, UAE. Mr Ahmed's presentation will provide a brief snapshot of the key factors impacting the current healthcare market situation in the UAE.

According to Mr Ahmed, “Despite significant improvements in healthcare systems across the region, the sector still offers significant opportunities for investors/operators on the back of the following factors: high population growth rates, poor government expenditure, introduction of compulsory health insurance (by a number of regional governments), high returns on healthcare investments, heavy reliance on imported medicine and medical equipment, and continued growth of regional medical tourism.”

Even though challenges to the growth of the healthcare industry in the UAE remain, there is still a lot of support in terms of funding options, especially for the established players in the private sector.

“Funding options are available to healthcare players,” says Mr Ahmed. “Al Noor Hospital, NMC Healthcare and Dallah Healthcare Holding have all successfully listed on regional or international exchanges (IPOs).  Banks are also actively seeking investments within the healthcare sector; however, they are limiting exposure to established players with proven track records. Investors entering the healthcare sector with Greenfield projects struggle to find project finance unless via recourse to alternative cash flows.”

Further difficulties arise with the terms offered as healthcare investments are typically long term investments contradicting banks risk appetite which typically extends to terms between 5-7 years.

“Typically, real estate investments in the healthcare sector generate yields of 9% - 11%, whilst IRR's for healthcare operations range from 15% to 23%,” continues Mr Ahmed. “Exploring the sales and leaseback model is an alternative approach for established players to improve returns through release of cash from noncore activities, and directing capital into core business strategies, in order to accomplish further growth.”

The 2nd International Medical Travel Exhibition & Conference (IMTEC) is relocating from Monaco to Dubai, UAE, in March 2014 under the guidance of Informa Life Sciences Exhibitions, organisers of the Arab Health Exhibition & Congress. The IMTEC exhibition will provide a unique opportunity for companies within the medical travel value chain to showcase their services and facilities to a focused audience of medical travel professionals. Alongside the exhibition is a multi-track conference where local and international recognised leaders in the industry provide delegates in-depth exposure to latest developments to implement into their medical travel practice.