_There’s a Growing Interest in Healthcare Real Estate Investment in Africa, Knight Frank report finds
Investors are considering healthcare assets in Africa as attractive investment options due to their defensible nature, triple net lease provision and sustainable demand, according to the inaugural Healthcare in Africa Report released by Knight Frank today.
The Knight Frank healthcare research team interviewed investment managers, REITs managers, and healthcare travel consultants in different countries to understand the healthcare investment landscape on the continent, following several key healthcare investment initiatives across Africa over the past five years.
Investment professionals interviewed opined that the preferred healthcare assets for investment would be established hospitals with strong brand equity.
However, lack of investible grade assets in healthcare leaves room for considering greenfield projects, as long as reputed healthcare operators are counterparties to the leasing contract.
The report found that more investors are looking into investing in Africa’s Healthcare due to population growth, rising middle class, urbanization, double disease burden, adoption of technology and shortfall in bed capacity across the continent.
Shehzad Jamal, Partner, Healthcare Consultancy, Knight Frank Middle East and Africa notes, “While the Covid-19 pandemic has posed an unprecedented healthcare and economic crisis, it has also presented us with an opportunity to examine existing healthcare infrastructure gaps and consider alternative mediums such as Telemedicine, a longstanding concept which is only now becoming mainstream. This, in turn, has caught the attention of a broader pool of investors to take a closer look and deploy funding towards healthcare.”
While still in its nascent stages, healthcare investment activity across the continent has manifested through Public-Private Partnerships, consolidation initiatives, and financing initiatives. Across the continent, the need for governments to facilitate investments in this sector cannot be overemphasized.
Tilda Mwai, Knight Frank’s Researcher for Africa notes, “Africa’s overall economic and demographic fundamentals present a strong case for investment in healthcare, with the private sector playing a pivotal role. With increasing urbanisation and a rising middle class, the need for specialised care continues to be prevalent.”
Investing in healthcare presents an opportunity for new master-planned developments (urban developments) to benefit from the synergies a healthcare component has to offer.
The report also states that other than South Africa, all countries on the continent fall short of the global average hospital bed to population ratio of 2.7 beds per 1000 people. Kenya is amongst countries like Nigeria, Egypt and Uganda, which require an additional 691,000 beds to meet the existing deficit at the global average hospital bed density rate.
The following insights from investment and healthcare professionals are captured in the report on the justification for investing in Africa’s Healthcare.
- Africa’s population has continued to grow at an average rate of 2.5% per annum compared to the global rate of 1.1%, making it the fastest growing continent across the world. The number of individuals aged over 60 is expected to almost double from the current level of 50 million by 2035, while individuals aged below 40 years are expected to grow by 360 million by 2035 from the current 190 million, presenting the diversity of the growing healthcare needs in the continent.
- Africa’s current urbanisation rate is 11 times that of Europe with 60% of the continent’s population projected to be urbanised by 2050. This rapid growth has further strained the current healthcare infrastructure in the continent and presents an urgency to fill this niche.
- According to the International Diabetes Federation in Africa, an estimated 2.8 million individuals aged between 20-79 years are diabetic (2019 data), which is projected to grow to 4.2 million by 2030. The rise in lifestyle diseases has led to a double disease burden (i.e. communicable and now non communicable diseases), with the lack of capacity to provide specialist care in the healthcare sector.
- Africa’s Middle class is expected to grow to 1 billion individuals by 2050, a threefold increase from 2019, which is in turn set to influence tastes and preferences and lead to increased demand for quality healthcare.
- India continues to be the leading medical travel destination across the continent primarily due to the countries aggressive marketing campaign, quality healthcare delivery and affordable pricing.
Alongside real estate experts, the Knight Frank Healthcare team includes medical doctors and corporate finance specialists who offer a wider perspective on the market and can identify where and what the opportunities are.