Private investments continue to pour into the UAE’s healthcare sector amid high growth, affluence, and a rising incidence of lifestyle diseases.
According to a UN report, the population of the United Arab Emirates will grow 2.03% between 2015 and 2020. From a projected 9.5 million in 2015, the total population will reach an estimated 10.6 million people by 2020. The growing population, rising income levels, and an increase in lifestyle diseases will result in a high aggregate demand for healthcare services.
Fresh Healthcare Capital
Companies in the private sector are trying to help the government boost healthcare infrastructure by pouring fresh investments into the UAE and beyond.
Dubai-based private equity firm TVM Capital Healthcare Partners, for instance, is investing $200 million over the next four years in various healthcare projects in the UAE, the Gulf region and India. TVM has already invested $120 million worth of projects with Germany's Provita and Britain's Bourn Hall International in the UAE since 2009.
"Our growth plan is to build these companies into strong entities in the UAE and expand into the other Gulf markets and beyond," Helmut Schuhsler, CEO of TVM, told Reuters. He identifies investments in Saudi Arabia, Qatar and Oman in the immediate future. "By 2020 we would have invested in at least 20 companies across the Middle East, North Africa and India. Our game plan is to build brands and expand in the region."
TVM could go public to raise the needed funds, following the lead of fellow UAE healthcare firms—including the Abu Dhabi-based NMC Health and Al Noor Hospitals, the largest healthcare provider in the UAE, who have both been listed on the London Stock Exchange in the past two years.
Alchemist Healthcare, another UAE-based firm, has recently secured a 75 percent equity stake in Dubai's Mussalla Medical Centre, after investments in two other healthcare projects in Abu Dhabi. The facility has 20 doctors in 24 specialties and serves more than 300 patients daily. Alchemist plans to expand into Saudi Arabia, Oman and Kuwait soon, but is strengthening its Dubai investment for now.
"The inclusion of Mussalla Medical Centre in our healthcare group is a significant step for our UAE expansion plan," Shailesh Dash, CEO and founder of Al Masah Capital Management Limited, which controls Alchemist, told Arabian Business. "We still feel that adding two or three more healthcare facilities in the UAE, especially Dubai will enhance our group’s value and network of doctors and healthcare facilities."
Short of Hospital Beds
Building new healthcare facilities would help meet Dubai’s need for 1,500 new hospital beds by 2020. To provide this need, the emirate’s private sector would need $1.5 billion to invest into the local healthcare industry by the end of the decade, according to a recent study by Colliers International.
The UAE as a whole would require 2,632 more beds and $2.87 billion worth of investments in the next six years from the private healthcare sector.
"More than half of the expansion will be led by established, local players as they have a history and banks and IPO options are open to them," Mansoor Ahmed, director of health care at Colliers, told The National. "New [providers], especially from Europe, India and the Far East, are interested in entering the market."
The expansion of healthcare facilities is more likely to reap benefits for both investors and patients alike, if they are built in areas that are underserved, but experiencing new growth. For example, in Dubai, the so-called “New Dubai” areas along Mohammed Bin Zayed Road, Al Khalil Road and Sheikh Zayed Road are good areas for investment, according to the report.
The UAE ranks second-highest in the world for diabetes prevalence, one of six Gulf states in the global top ten. Cardiovascular disease is the leading cause of death in the country, and risk factors such as hypertension and obesity are rising.
Along with population growth, the rising incidence of lifestyle diseases in the UAE and the GCC will continue to fuel the demand for healthcare investments. Some of the earliest investments in the sector are bearing fruit, as the medical tourism industry in the UAE reached US$ 1.69 billion in 2013 from US$ 1.58 billion in 2012, according to Alpen Capital.