Dubai: With its reliance on imported medicines and equipment, inflationary costs for the health-care sector in Dubai and the UAE are on the higher side compared with other regions. Any mismatch on the funding side could have immediate consequences on the long-term health of any investment commitment in the sector.
By 2020 Dubai’s private health-care sector will need approximately 1,500 new hospital beds, translating into an estimated investment of $1.5 billion, according to new estimates by Colliers International. Apart from the expected increase in population numbers, universal health coverage for its residents is also being actively pursued by the authorities. These two factors taken together would ratchet up the need for optimally priced health care.
Even then, Colliers estimates that “efficient” private hospitals could achieve 15—20 per cent net profit margins after initial stabilisation years.
But the upfront costs can be quite substantial. “This is why many health-care providers in the UAE prefer not to own the land and also get the actual property for the health-care facility to be built by the plot owner or an investor,” said T.J. Wilson, CEO of Aster DM Healthcare. “This frees up health-care providers to focus solely on the hospital’s internal requirements as well as the human resources needed for any major new facility.”
According to Colliers International, a number of medical equipment suppliers also provide equipment on long-term leases, and even equity investment to facilitate initiatives.
The private sector in Dubai has a major share — 22 — of the 28 hospitals in the emirate. By the end of 2012, there were also a total of 1,348 clinics, of which 97 per cent were owned and operated by the private sector.
