Best medicine

Quality of healthcare is a measure of a nation's development, often reflected in life expectancy and infant mortality rates.

A sturdy healthcare system is the cornerstone of a developed nation and an area for steady development investment.

Social infrastructure is the fabric of society. Development of hospitals and the healthcare system that goes with them, are the signs that a government cares and they are frequently the first measure of a nation’s development. They contribute directly to measures of longevity, disease control and the reduction of infant mortality.

It is easy to trace the path of such development in the statistics of the World Health Organisation (WHO). According to figures from WHO, the average Emirati is enjoying an additional 5 years of life now, compared to 1990. This is the biggest improvement seen in any of the GCC countries in the last 30 years.

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In the same period, infant mortality has more or less halved in Qatar, Kuwait, Oman and the UAE, while there have been significant improvements in Saudi Arabia and Bahrain.

Healthcare developments have helped spearhead this improvement. As populations in the region continue to grow, more public and private money is being put into maintaining and developing the expanding network of Gulf healthcare facilities. While projects are challenging and place new demands on contractors, returns are typically steady and long-lasting.

The numbers involved are large, but seem relatively moderate when compared to other long-term investment sectors. For instance, figures from Proleads show government investment in healthcare-related projects in Saudi Arabia is currently running at more than US $5 billion,with an additional US $1 billion coming from the private sector.

Recently Kuwaiti healthcare facilities were boosted by the launch of a US$1.06 billion hospital project, which is set to provide more than 1,200 beds. The new Sheikh Jaber Al-Ahmad Hospital is slated for completion in 2013 and is expected to take four years to finish.

According to a report from Alpen Capital, an investment bank, per capita health care spending across GCC countries is expected to continue growing ahead of the global average. Government impetus is one reason, but there is an underlying and positive view that healthcare projects offer a good return.

“Healthcare is genuinely recession proof, unlike real estate,” says UEMedical managing director and CEO Mohammed Ali Al Shorafa. “By its sheer nature, it requires a long-term view and you therefore get an altogether different type of investor.

“It’s a really niche area of development with an entirely different set of challenges. From funding model, through environmental aspects, MEP, medical and equipment planning, selecting and sourcing: the project management team becomes extremely important.

“You have to understand that developing these facilities is not cheap and the requirements are much, much higher.”