How developers can put money in health facilities

Most hospitals sit on a tiny plot and lacks space or amenities. FILE PHOTO | NMG 

By EDWARD OMETE
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Commercial real estate developments in the city are facing an interesting time. No doubt as one of the
painful monthly expenditures, rental fees are amongst the closely evaluated costs for individuals, families and businesses. The state of the economy is currently deemed tough by many, judging by various economic confidence surveys, performance of business and cash flows particularly for startups.

The trickle-down effect is that consumers are spending less and demanding discounts in their purchases. For most business owners, retaining clients and cutting down operational costs is vital to stay afloat.

This may have also extended to the real estate sector going by sentiments aired in the press and casual observations on occupancies and rental distress.

The detailed Census 2019 report is yet to be released, but housing component would be interesting to explore. The curernt housing glut is not a product of supply, it is that of a weak demand.

It may get worse what with the government’s “affordable” developments under the Big Four agenda where an estimated 500,000 low cost houses are to be constructed.

To attract and retain tenants, many developers are offering a raft of incentives. In the Central Business District (CBD), free rent periods, abolition of deposits and lowering of rent are attempts to retain tenants.

Declining mall fortunes have in particular affected doctors’ clinics and pharmacies that depend on people visiting the shopping centres. The same applies to many other businesses.

While developer angle for the commercial and housing markets, they need to consider investing in healthcare and associated real estate as safer bets. If these succeed beyond the start-up phase, a majority will survive and expand in size.

How will hospitals in the future look like? Most hospitals sit on a tiny plot and lacks space or amenities that a modern and proper facility should have.

EXPANSION FRENZY

Across the city, many hospital owners are demolishing parts of their facilities to expand or conform.

As building standards and codes in hospital construction become mandatory, many more will follow suit.

For developers uncertain with the shifting housing landscapes, construction around healthcare is not an unwise decision.

Dwindling populations from the census report as well as evolving family structures (more elderly people are living alone) suggests that assisted living developments and homes may take root.

Developers keen on investing in healthcare real estate should know that medics are not averse to collaborations on Build Own Transfer or conversion into equity.

As it stands, many health entrepreneurs constrained by capital cannot have premises needed while developers with resources lack outlets.