A joint report by global real estate consultancy Knight Frank and US partners Berkadia has highlighted a severe shortage of healthcare infrastructure in India, signaling an urgent demand for 2 billion square feet of additional space and 2.4 million beds to reach the recommended ratio of 3 beds per 1000 people. Major points from the report include:
Key Investment Opportunities
India boasts 582 medical infrastructure investment opportunities, including hospitals, valued at $32 billion, with the private sector holding a dominant 63% share in the healthcare market.
The sector has surged from $73 billion in 2012 to $372 billion in 2022, growing at an annual rate of 18%, accelerated by the pandemic. Global investments in healthcare real estate have hit $38 billion, constituting 4.3% of total global real estate investments.
Demand Drivers and Policies in India’s Healthcare Sector
India, dedicated to Sustainable Development Goals, aims for Universal Healthcare Coverage, with policies boosting healthcare spending to 2.5% of GDP. Rising lifestyle diseases, especially cardiovascular issues, drive demand for specialized healthcare.
Knight Frank notes India's rapid economic growth fueled by an ageing population, increasing per capita incomes, heightened health awareness, and expanding health insurance penetration, contributing to the surge in healthcare demand.
India's Rising Role in Healthcare Tourism
India emerges as one of the most affordable healthcare destinations globally, providing quality medical procedures at a relatively low cost. Despite infrastructure deficits, the country remains an attractive market for healthcare tourism.
India secures the 10th position out of 46 destinations in the Medical Tourism Index (2020-21). The 'Heal in India' initiative, launched in 2022, aims to strengthen the healthcare ecosystem and improve India's standing in medical tourism.
Challenges, Opportunities, and Investor Trends
Shishir Baijal, Chairman and MD of Knight Frank India, stresses the urgent need to double real estate capacity to meet India's growing healthcare demands, citing the population-to-bed ratio challenge. Post-pandemic, healthcare emerges as a prime investment for those seeking long-income assets, with a quarter of Indian ultra-high net worth individuals expressing interest in healthcare-related assets in 2023.
Notably, global investors, mainly from North America, contribute 68% of funds, while private sector investments in the APAC care sectors reached a record high of $2.8 billion in 2022.
The Broader Appeal for Investors
Julian Evans, Partner and Head of Healthcare at Knight Frank, highlights the consistent appeal of healthcare investments across sub-sectors and geographic borders. The sector's potential to support Environmental, Social, and Governance (ESG) investing strategies attracts private equity, REITs, and institutional investors globally.
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