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healthcare real estate: India needs additional two billion sq ft healthcare-related real estate, says study


India needs additional 2 billion sq ft space for healthcare facilities to cater to its current population base of 1.42 billion people as the country is one of the fastest growing economies with high personal spending potential with healthcare as a major share, showed a Knight Frank- Berkadia joint study.

The country has a considerable gap between the number of hospital beds available and the number of hospital beds required. The existing bed to population ratio is 1.3/1,000 population including both private and public hospitals, and there is a deficit of 1.7/1000 population. To cater to the existing population, there is an additional requirement of 2.4 mn beds.

This disparity provides an opportunity for public and private players to expand their footprint in the healthcare industry in India. As per Indian government estimates, there are about 582 investment opportunities in medical infrastructure including hospitals valued at $32 billion.

The hospital industry accounts for 80% of the healthcare market in India and the country has an estimated 70,000 hospitals of which the private sector constitutes 63% of the total share.

“The challenge of India’s population to bed ratio, coupled with increasing population, underscores the pressing need for significant enhancement in the country’s healthcare infrastructure. Addressing this demand necessitates nearly doubling the current real estate capacity to adequately meet the expanding healthcare requirements of the population,” said Shishir Baijal, CMD, Knight Frank India.

According to him, post the pandemic, healthcare ranks amongst the mainstream avenues for investors looking for investments into long income generating assets. Almost one-fourth of the Indian ultra-high net worth individuals had cited to invest in healthcare related assets in 2023.There is also an emerging opportunity for investments in medical research and development, to accentuate discovery of new drugs to navigate any future break out of pandemic inflicted diseases.“Broad in its coverage, the case for investment in the healthcare sector remains consistent not only across its various sub sectors but also across geographic borders. Supported by an ageing population across the globe and shifting demographic trends, the healthcare sector is seeing increased demand for long-term care facilities,” said Julian Evans, Partner and Head of Healthcare at Knight Frank.

Furthermore, he is of the view that as private equity, REITS and institutional investors continue to chase the strong, long income generated, there is growing interest in healthcare’s capabilities to aid ESG investing strategies.

India’s healthcare market was estimated to be at $372 billion in 2022, a significant growth from $73 billion a decade ago, in 2012. At this level and pace, the country’s health care industry has grown at an annual average rate of 18% and got accelerated with pandemic as it challenged the healthcare sector by stretching the need for infrastructure and service delivery, therefore making it a trigger for transformation.

Global investments in healthcare related real estate have reached $38 billion, accounting to 4.3% of total global real estate investments, showed the analysis by Knight Frank and its US-based partner Berkadia.

Factors such as the gradual rise in an ageing population, increasing per capita incomes, growing health awareness and the penetration of health insurance drive the demand for the healthcare industry in India. Additionally, there has been a growing incidence of lifestyle diseases in India led by cardiovascular diseases, which will heighten the demand for specialized healthcare.

India is emerging as one of the most affordable healthcare destinations in the world providing quality medical procedures at a relatively cheap cost. In the pre-pandemic years between 2014-2019, the inflow of foreign tourist arrivals on medical visas grew at a CAGR of 30%.

It is noteworthy that despite the deficit in healthcare infrastructure in India, the country is an attractive market for healthcare tourism. As per Medical Tourism Index (2020-21), India ranked 10th out of 46 destinations in the world.

With an aim to improve medical tourism, India’s tourism ministry formulated a national strategy and roadmap for medical and wellness tourism in 2022 under the ‘Heal in India’ initiative with the primary objective to strengthen the healthcare ecosystem in the country.


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