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Al Mazaya Holding’s Weekly Real Estate Report

Amid High Demand and Diversity of Investment Opportunities

Al Mazaya’s Report: Health Care Projects are facing competitiveness and high cost risks as they pursue growth

The success or failure of vital projects depends mainly on the nature of the targeted area and forecasts of future demands. At the same time, the individual ability of each project to generate cash flow and contribute to the GDP of any economy depends on specifying the volume and type of these projects and the appropriate timing to invest in them. Remarkably, the investment and expansion plans of countries in the region are developed based on specific economic sectors, through which the pace of economic activity can be raised to the levels of developed countries. This can also help diversify economic activities and income.

When discussing health care projects with regards to domestic demand and providing the community with key services, they are classified under the appropriate development sectors. Meanwhile, if we are talking about expanding health care services at the regional and global level, their importance vastly increases and we can begin discussing them in terms of successful or unsuccessful investments. It is noteworthy here that several of the region’s countries have plans in place for the development of health care services, given their remarkable role in increasing the pace of financial and economic activity. Their positive impact on the establishment of work for many other sectors is also a factor, in addition to developing the level of competition at the global level and raising the countries’ capabilities to develop their financial resources in the long run.

In this regard, we cannot address health care projects in the countries of the region over the past ten years without mentioning the evolution in real estate and tourism sectors.  Commenting on this aspect, Al Mazaya Holding’s weekly real estate report points out that the nature and objectives of real estate projects that targeted foreign investments have been developed, taking into account ways to increase their ability to compete in the global tourism market. This development has seen an increase in healthcare projects, which have become attractive investments from both the public and the private sectors.

It is worth mentioning that the accelerating development of infrastructure projects in many countries that has been reported is a key factor in their relative success or failure in general terms, as well as with regards to the projects related to tourism and health care in particular. It is important to note here that health care projects in the countries of the region have enjoyed significant successes, but there are still a great deal of obstacles and challenges facing them – some of these projects have succeeded in providing services at the local level, while others have succeeded in developing their capabilities to offer competitive services on a global scale, and have also successfully attracted investments.Other countries are still seeking to meet the domestic demand within the framework of development plans, which are often influenced by local and global financial and economic developments.

Al Mazaya’s report stressed the importance of health care projects that have been completed and those which are under construction in the countries – these fall into the category of creating investment and job opportunities for many of the economic sectors, as the health services sector is overlapping and intertwining with other sectors.These investments can be classified under the plans and projects of the region’s countries, which focus on investments that attract foreign investments, as well as scientific and technical efficiencies. Here it is relevant to stress the importance of developing services provided at the local and regional level, which in providing a suitable alternative in the countries of the region will reduce the cost of treatment abroad.

Al Mazaya’s report asserts that the projects and investments in this sector are still vital and viable at the financial and economic level.  In addition, they offer many positive aspects for the support of the rest of the sectors activities, as well as maintaining a minimum of economic activity needed by the countries of the region in light of the reported decline of spending and of the offered projects both quantitatively and qualitatively. Consequently, we can say that the successes achieved so far can contribute to creating more qualitative projects that ensure the sector’s continuity, growth, contribution to the development of the sources of income and granting of the economies of countries in the region more resistance to financial and economic pressures.

Al Mazaya’s report states that the health care projects are a priority at the moment, which supports the significance of introducing more projects that provide greater specialization and quality of services. This comes at a time when the world is going through a trend towards a healthier lifestyle. Thus, the viability of health projects of all kinds is improving – a fact which serves to motivate investment in these kinds of projects. The increase in demand has contributed to the expansion of services and investment opportunities. Activities like jogging are considered a serious opportunity to invest in the development of specific projects, for example: the preparation of athletes participating in races, increasing the number of gyms, and investment in sports equipment. In addition, according Al Mazaya’s report, the prevalence of large sporting events and their associated advertising opportunities and related economic projects offer assurances that the health care sector will be constantly developing. It also discusses how the coming years will see more demand for health services, with a trend towards increased fitness and sporting activities to ward off diseases and obesity.

Al Mazaya’s report states that the UAE’s experience in this field is advanced and capable of application in various countries in the region, where the successes achieved depended on the overall development of key economic sectors, as well as the application of laws and regulations which attract and encourage investment. In addition, the economic diversity of the state contributed to the development of the health care sector. At present, all economic sectors are able to support the growth and sustainability of the sector, coming as it does at a time when the growth expectations by 2020 are likely to exceed the healthcare market volume in the country by more than 71 billion dirhams – right now, the UAE accounts for 26% of the total expenditure of GCC governments on health care. The UAE is one of the first countries in the region to encourage investment in medical tourism and facilitating the entry of patients to the state.

It is noteworthy that by the year 2021, the health sector in the state will have fulfilled all international standards and will be able to attract large numbers of tourists to be cured. 40 billion dirhams were spent on the health sector in the state in 2015 and the therapeutic tourism sector growth rates hit 15%. Following on from that, we can surmise that the UAE will be the capital of medical tourism in the next few years, accounting for the largest share of the coming therapeutic tourism to the Middle East. This continuous development of the sector services will solve a lot of problems, foremost of which is the reduction of the cost of treatment abroad on the one hand and raising the number of foreign tourists coming for treatment on the other hand.

Al Mazaya’s report stresses the importance of maintaining the progress and development of the services provided by the health sector in the region’s countries. This is due to the high demand for health services, as well at the importance of maintaining the competitiveness and ability to attract investment and beneficiaries of the advanced medical services. The report also states that the sector’s stakeholders should reduce the costs of treatment and health services by launching more projects and expanding and diversifying their range of services. In addition, the report states that the private sector must be given more freedom to carry out projects in order to prevent them being affected by the recorded decrease in the budgets of Gulf governments due to lower oil revenues – this will ensure the continued establishment of health centers and construction of hospitals and clinics, as well as the development of the current infrastructure of the sector.

Al Mazaya’s report asserts that all of the indicators displayed by the health care sector point to an increase in spending on health care, high costs, and that the countries of the region’s health services still needs to overcome a number of challenges to raise the level of health services provided, which is still lower than the levels specified by the Organization for Economic Co-operation and Development. In addition, there is a lot of work needed to increase health care efficiency in the region and overcome the challenges of financing that prevent a takeover of the private sector on advanced shares. The report also guarantees that the health care sector is still enjoying a lot of good investment opportunities, which hardly exist in other major economic sectors.