Gcc Healthcare Construction Market Final

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GCC Healthcare Construction
Market Outlook
September 2015

Dubai
Dubai World
World Trade
Trade Centre
Centre
23
23 -26
-26 Nov
Nov 2015
2015

www.thebig5.ae

The GCC healthcare construction market is set to register strong growth in the coming years due to
rising population and per capita incomes. The contractor awards for the GCC hospital construction
projects are expected to increase from US$ 5,850 million in 2014 to US$ 7,300 million in 2015. The
Kingdom of Saudi Arabia (KSA) is projected to remain the largest market in the region with the UAE
and Qatar expected to be the fastest growing markets for the sector.
TRENDS AND DEVELOPMENTS IN THE GCC HEALTHCARE MARKET
The GCC healthcare sector will continue its strong growth in the coming years. The GCC countries depend heavily on
government funding to meet healthcare needs, which have embarked on ambitious healthcare infrastructure building
programs supported by larger healthcare budgets. According to GCC Healthcare Sector Report by Alpen Capital in
April 2014, the GCC healthcare market is projected to grow at 12 percent per annum to US$ 69.4 billion by 2018.
According to Ventures Onsite MENA Projects Database, there are nearly 70 mega hospital projects in the GCC that are
under construction and each valued at over US$ 100 million. Additionally there are several smaller scale hospital
projects under construction. The total number of hospital projects in the GCC in all stages (planned, design, tender for
construction and under construction) of development is nearly 350.
The contractor awards for the GCC hospital projects are expected to increase from US$ 5,850 million in 2014 to US$
7,300 million in 2015. The Kingdom of Saudi Arabia (KSA) is projected to remain the largest market in the region and
the UAE and Qatar are expected to be the fastest growing markets for the sector. Bahrain, Oman, and Kuwait are
anticipated to register a significant jump in project completions in 2015 over 2014.
The growth drivers for the GCC hospital construction projects are rapidly growing population and per capita income,
rising life expectancies, high incidence of lifestyle-related diseases, and ambitious medical infrastructure projects by the
GCC governments.
Medical tourism is emerging as an important trend amongst GCC countries, further fuelling growth of the healthcare
segment. The UAE and Oman are leading the way in tapping into this potential resource for growth with the
governments providing specialised facilities to support the trend. For example, the UAE is building 22 hospitals to take
care of half a million medical tourists by 2020.
In addition, the GCC governments are also looking at public private partnership (PPP) models to help reduce overall
financial risks, enhance the quality and range of services, gain expertise, and prompt innovation. The private sector’s
share in the GCC healthcare market is expected to reach 33 percent by 2020.

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Synopsis of outlook for each GCC
country

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UAE
The healthcare
market is expected
to grow at a
CAGR of 7 percent
from 2015 to 2020
and revenues from
medical tourism in
Dubai are
predicted to
increase to US$
299.5 million in
2016.

The UAE is one of the most developed markets in the GCC region. Healthcare
spending in the UAE is expected to reach US$ 10.8 billion by 2015. The UAE
government is also liberalising policies to attract foreign investments, in order to
improvise the healthcare standard and boost the healthcare industry. The
healthcare market is expected to grow at a compound annual growth rate
(CAGR) of around 7 percent from 2015 to 2020. Colliers International in its Q4
2014 healthcare report estimated that the value of the UAE’s private hospitals
property is expected to reach US$ 2.83 billion and the estimated number of
private beds will reach 5,188 by 2020.
Dubai has witnessed a sudden spurt in private hospitals in recent years. In 2014,
the Dubai Health Authority (DHA) issued 301 new licenses and approved 10
new hospitals in the private sector to cater to the needs of a steadily growing
population. Many of them are under construction and some are operational.
As part of its efforts to encourage medical tourism, the UAE government is
aiming to increase the number of private and public hospitals. The government’s
vision of making the country a top destination for medical tourism over other
countries such as Germany and US will be one of the future growth strategies for
the healthcare sector. For example, Dubai can expect at least half a million
healthcare tourists to be part of the massive influx of visitors arriving for the
Expo 2020. According to the Dubai Health Authority, revenues from medical
tourism in Dubai are predicted to increase to US$ 299.5 million in 2016.
The major hospital construction contracts awarded in the UAE in 2015 includes
the following:





Gulf Medical University Hospital in Ajman (US$ 95 million)
Expansion of Zulekha Hospital in Dubai (US$ 54 million)
Al Bustan Specialty Hospital in Mussafah (US$ 30 million)
ADNOC Medical Centre in Khalidiya (US$ 15 million)

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KSA
KSA’s healthcare
spend is set to
reach a total of
US$ 31.5 billion
by 2018 and is
expected to grow
at a CAGR of 9.2
percent from 2015
to 2020.

The KSA is by far the largest healthcare market in the GCC as it accounts for
more than half (52.3%) of the region's market. The country’s healthcare industry
has been witnessing significant growth due to rising population, prevalence of
lifestyle and infectious diseases, longer life expectancy and government
initiatives for improving healthcare infrastructure. A 10-year development plan
(2010-2020) is in place which aims to create five specialised hospital hubs with
Riyadh in the centre, Makkah in the West, Asir in the South, Dammam in the
East and Al Jouf in the North. New initiatives have been taken for building new
hospitals and primary healthcare centers. Government hospitals constitute more
than half of the total number of hospitals in the country. Private hospitals are
registering rapid growth in regions such as Jeddah, Riyadh, Makkah. According
to figures from Alpen Capital, based on data from the International Monetary
Fund, WHO and MoH, KSA’s healthcare spend is set to reach a total of US$
31.5 billion by 2018. KSA’s healthcare industry is slated to grow at a CAGR of
9.2 percent from 2015 to 2020.
In KSA’s record 2015 US$ 229 billion budget, healthcare and social affairs
received the second-biggest allocation, after education, amounting to US$ 42.7
billion, representing 18.6 percent of the total and an increase of 48 percent from
2014 budget. In February 2015, the ministry announced that work is underway to
complete the construction of 88 centres holding 70 beds and focusing on a wide
range of specialist treatments. The government’s plans also include the
construction of 132 hospitals, five new medical cities providing a total of 6,200
beds in hospitals and clinics, and expanding the existing medical cities in
Makkah and Riyadh. Moreover, in the coming years, the number of private
hospitals and beds will increase significantly as the demand for healthcare needs
is rising at a fast pace than the growth in the number of public sector hospitals.
The major hospital contracts awarded in the KSA in 2015 include 500-Bed
Mental Health Hospital in Taif (US$ 98 million) and Mouwasat Hospital in Al
Khobar (US$ 65 million).

Bahrain
Millions to be
invested in the
health sector in
the next 10 years.

Bahrain‘s Economic Vision 2030 lays special emphasis on the health sector.
Millions of dinars will be invested in health centres and hospitals across Bahrain
over the next 10 years. Bahrain has several healthcare projects lined up for
completion in 2015. In addition, the government plans to build a long-term care
facility centre, along with a number of other health centres in the northern part of
the country, for US$ 36.9 million. One of the major hospital contracts awarded
in Bahrain in 2015 is the US$ 105.3 million Mohammed bin Khalifa Specialist
Cardiac Hospital in Awali.

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Oman
The Ministry of
Health’s budget
will have to almost
double by 2020,
which could see
the private health
sector taking on a
greater role.

Qatar
Allocations to the
healthcare sector
increased to US$
4.3 billion in 2015,
as Qatar prepares
to double the
number of health
facilities in the
country by 2022.

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In its 2015 budget, Oman has allocated US$ 4.2 billion or 11.3 percent of the
total outlay towards the healthcare sector, which translates into delayed
healthcare projects expected to be revisited in 2015. Oman is now targeting
10,000 new clinics over the next 35 years, in line with the country’s long-term
strategy for the sector, Health Vision 2050. It also has short-term five-year health
development plans. The main focus for the next five-year plan includes:



Construction of 7 hospitals, 5 health complexes and 27 health centres.
Expansion of few of the existing health institutions in all governorates.

The Ministry of Health is currently embarking on important health projects,
which is estimated to cost a total of US$ 189.6 million. Apart from the current
projects being undertaken, there are also several projects related to health centers
and other rehabilitation and expansion projects in the pipeline, which amount to
US$ 104 million. This is all part of the government’s Eighth Five-Year Plan that
will place Oman as the next medical hub in the region. The budget of the
Ministry of Health will have to almost double by 2020 (US$ 12.9 billion from
the US$ 6.47 billion in the Eighth Five-Year Plan), which could see the private
health sector taking on a greater role. The number of hospital beds required to
meet the demand is expected to increase to an estimated 6,300 by 2015.

Allocations to the healthcare industry’s budget increased from US$ 3.9 billion in
2014 to US$ 4.3 billion in 2015, as Qatar prepares to double the number of
health facilities by 2022. Accordingly, funds have been allocated to complete the
Sidra Medical and Research Center; expand facilities at the Hamad General
Hospital and the Hamad Medical Corporation (HMC); establish a dedicated
hospital for workers; and build new health centers.
Qatar’s National Vision 2030 sets out the government’s goal of improving the
health of the country’s population by developing a world-class and integrated
healthcare system.
Qatar’s Public Works Authority (Ashghal) had invited proposals by 11th August
2015 for pre contract professional consultancy services for design and general
supervision of a new 250-bed hospital adjacent to Qatar University. Also,
enabling works contractors are preparing to submit bids for another Ashghal
tender for the National Center for Cancer Care and Research.

.

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Kuwait
To tackle the
undersupply of
healthcare
facilities, the
government has
initiated the
implementation of
Nine Hospital
Expansion
Projects, which
are expected to
add a total of
5,000 beds to the
existing capacity.

The budget forecast for 2015-16 is expected to be close to US$ 6.6 billion.
Kuwait nationals are entitled to free medical treatment at government facilities,
while expats are expected to pay an annual fee to access public healthcare
facilities. The country is divided into five health regions: Kuwait City, Al Jahra,
Jabriya, Reqqa and Farwaniyah. Each offers a general hospital providing full
outpatient service and 24-hour emergency services. Kuwait’s government is
responsible for over 80 percent of the total investment in the healthcare sector.
The private healthcare sector is estimated to take a share of 15-20 percent of the
healthcare spending.
However, the supply of the healthcare facilities in the country is yet to match the
population growth. In order to tackle this undersupply of healthcare facilities, the
government has initiated the implementation of nine hospital expansion projects,
which are expected to add a total of 5,000 beds to the existing capacity in
addition to building new hospitals.
Moreover, the government has also announced a number of new projects to be
constructed across the country, based on the public-private partnership (PPP)
model, which is expected to bolster the service quality, while meeting the
demand for healthcare facilities.

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Major GCC Hospital Construction
Projects

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MAJOR HOSPITAL CONSTRUCTION PROJECTS ACROSS THE GCC, SEPTEMBER 2015
Project Name

Country

Client

Est. Value
(US$ Mn)

Military Medical City in Riyadh - Phase 1

Saudi Arabia

Sidra Medical and Research Centre

Qatar

King Abdullah Bin Abdulaziz Project For
Development of Security Forces Medical Complexes

Saudi Arabia

Sultan Qaboos Medical City Complex

Status

Ministry of Defence and Aviation, Riyadh

3,800

Construction

Qatar Foundation for Education Science
and Community Development

2,400

Construction

Ministry of Interior, Riyadh

1,813

Construction

Oman

Ministry of Health, Oman, Muscat National
Development and Investment Company
(Tatweer)

1,500

Planned

Hospital Complex in Barka

Oman

Ministry of Health and Medical Education,
Iran

1,500

Design

King Abdullah Medical City - Makkah

Saudi Arabia

King Abdullah Medical City, Makkah,
Ministry of Health

1,400

Tender for
Construction

New Jahra Hospital (NJH)

Kuwait

Amiri Diwan, Ministry of Public Works
(MPW)

1,266.53

Construction

New Al Ain Hospital

UAE

Seha - Abu Dhabi Health Services, Abu
Dhabi General Services PJSC (Musanada)

1,089

Construction

Jaber Al Ahmed Al Sabah Hospital

Kuwait

Ministry of Health, Ministry of Public
Works (MPW)

1,057

Construction

New Medical City and Trauma Mass Casualty
Hospital

Qatar

Public Works Authority (Ashghal)

1,000

Design

Farwaniya Hospital Expansion

Kuwait

Ministry of Health, Kuwait

924.75

Construction

Mafraq Hospital in Abu Dhabi

UAE

Bumrungrad International, Seha - Abu
Dhabi Health Services, Mafraq Hospital

871

Construction

Al Adan Hospital Expansion

Kuwait

Ministry of Health, Kuwait

800

Construction

New Sultan Qaboos Hospital in Salalah

Oman

Ministry of Health, Oman

700

Tender for
Construction

New Hospital Complex for Sheikh Khalifa Medical
City (SKMC)

UAE

Seha - Abu Dhabi Health Services

680

Tender for
Construction

Source: Ventures Onsite Projects Database: www.venturesonsite.com

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