As Egypt’s population grows and legislation moves toward a greater proportion of citizens having access to health insurance, demands on hospital services and spaces will increase, creating opportunities for new entrants to the market.
Recent data from the World Bank estimates that as of 2012 Egypt had 0.5 hospital beds available per 1000 people, compared to 1.8 in Jordan and 2.5 in Turkey. With a birth rate of 3.31, the demand for services is set to rise. In its 2017 report “Healthy Returns”, global real estate firm Jones Lang LaSalle estimated that the next five years would see increasing opportunities for private players in medical real estate. Based on population growth projections, Cairo alone will need 32 hospitals and 4800 beds. Similarly, a 2016 report from commercial real estate firm Colliers International estimated that Egypt will require an additional 35,000 hospital beds over the next 10 years, with Cairo and Giza needing a further 7000 beds. This translates into a requirement of 4.4m sq metres in hospital space and 2.7m sq metres of clinic space by 2025, with investments worth LE40.5bn ($2.7bn) and LE17.8bn ($1.2bn), respectively.
In anticipation, the government is increasing allocations for hospitals in the proposed FY 2017/18 budget, as well as moving to embrace private players to help meet new demand. At the end of 2016, the Ministry of Investment and International Cooperation announced feasibility studies for 75 integrative Takamul hospitals across 16 governorates as part of the government’s plans to restructure those facilities under private sector management. Currently, Takamul facilities consist of a network of 377 hospitals that were established during the 1990s to provide basic care across impoverished areas, many of which have since fallen into disrepair after years of neglect.
Initial calculations estimate the hospitals as being worth around LE2.2bn ($144.9m).
Private interest was on display in April 2017 when the first annual conference for investment in the health care sector was held in Cairo in conjunction with the annual Mediconex Healthcare Exhibition and Congress. In particular, GCC investors have been a major source of investments to date. The Cleopatra Hospital Group – one of the largest private hospital groups in the country, operating four facilities in Greater Cairo (Cleopatra Hospital, Cairo Specialised Hospital, Nile Badrawy Hospital and Al Shorouk Hospital) – reportedly achieved LE261.8m ($17.2m) in revenues during FY 2016/17 (up 29% on 2015/16) and plans to allocate more than LE1bn ($65.9m) to the acquisition of two new hospitals and the management of a third.
Saudi German Hospital, part of the Middle East Healthcare Company network, plans to establish four new hospital branches in Giza, Ismailia, Assiut and New Cairo. With almost 300 beds, Saudi German Hospital is currently the largest private hospital in Egypt. Saudi-headquartered Andalusia Group has also announced plans to open two new hospitals in the 6th of October and Fifth Settlement in New Cairo, a LE750m ($49.4m) investment.
In addition to hospital floor space, medical technology and devices is another growth area. Egypt’s market for medical devices is the second largest in the Middle East, with sales totalling $25m in 2016, and it is set to grow. GE Healthcare announced a $25.8m project to bring equipment to more than 200 hospitals across Egypt, as well as providing accompanying training, including provision ultrasound and anaesthesia equipment.
Room To Grow
Egypt’s health care infrastructure requires significant investment, for both general facilities and specialised medical centre needs. With the new investment law set to facilitate entry for private players, this represents an important opportunity for investors in the medium to long term.
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