The Pulse. 7th Edition 2017 Egypt Healthcare GENERAL HOSPITALS CLINICS
We have a number of opportunities for healthcare We are seeking investors to partner with a service providers, where the market entry is recognized healthcare operator to establish possible by way of management agreement, Joint Clinics in: Venture and Long-term Lease of Land and/or >> Riyadh Property. >> Abu Dhabi >> Riyadh >> Sharjah >> Cairo >> Cairo >> Ajman Possible modes of market entry include: >> Dubai >> Fujairah >> Management Agreement >> Joint Venture >> Abu Dhabi >> Long-term Lease of Land and/or Property
Providers and Investors Seeking to Expand in the Middle East and North Africa Opportunities for Healthcare Service The opportunities are available in:
LONG TERM CARE & CENTERS OF REHABILITATION CENTERS EXCELLENCE
We are seeking to introduce well known Long- An established and recognized healthcare term Care and Rehabilitation providers to known provider is seeking to setup centers of investors in Cairo, Ajman, Abu Dhabi and Riyadh. excellence through management agreement, joint venture or long term lease. The way of dealing is available through: The opportunities The Specialties are: >> Management Agreement are available in: >> Ophthalmology >> Joint Venture >> Riyadh >> Pediatric >> Long-term Lease of Land >> Cairo >> Maternity and/or Property >> Dubai >> IVF >> Abu Dhabi >> Orthopedic >> Sharjah >> Beauty & Cosmetics >> Ajman >> Wellness >> Fujairah Introduction
Egypt is the most populous Arab Ian Albert Regional Director | Middle East and North Africa country in the world with Valuation and Advisory 94.7 million residing in Egypt [email protected] and 9.5 million living abroad. With a population growth rate of 2.2% per annum, this will continue to fuel demand for infrastructure services with a direct impact on the evolving Mansoor Ahmed Director | Middle East and North Africa urban landscape. Greater Cairo, Development Solutions, Healthcare, Education & PPP which includes Giza, Cairo and [email protected] 6th October City, is home to almost 17.2 million population.
With 1.5 beds per 1,000 population in 2014, the healthcare sector in Egypt lags behind both quantitively and qualitatively in provision of healthcare infrastructure Karim Helal and services. The healthcare system Country Director | Egypt [email protected] faces the burden of providing healthcare services associated with poverty, which stood at 27.8% (25.5 million), the illiteracy rate stood at 15.8% (14.5 million). Concurrently, the healthcare system needs to treat emerging diseases and illnesses associated with modern and urban lifestyle, partially due to the growing middle class population.
Egypt Healthcare | The 7TH Pulse | 2017 3 The Egypt healthcare sector is required to evolve at a very fast > Medical Tourism: Egypt has earned a strong reputation pace and investors and operators of healthcare facilities need to within the region of having quality doctors and infrastructure make challenging decisions. In the coming years the healthcare at a cost effective fees and with easier visa access when system needs to improve both quantitively and qualitatively to compared to some of the regional competitors which has meet with the existing and potential demand gap, thus it will helped the country to earn a reputation of a medical tourism continue to offer opportunities for investors/operators. Key hub in the region. Medical tourists, coming to Egypt, are factors that make Egypt’s healthcare market attractive are: mainly from North, East and West Africa & GCC. >> Growing Population: The country has an estimated > Clinical & Beauty Related Treatment: The growth in the population of 91.5 million in 2015, which is expected to reach middle and upper class income have resulted in a growing 151 million by 2050. demand for beauty and cosmetic related treatments, such as body contouring, anti-aging, lipoplasty (liposuction), eyelid >> Demographics: Egypt had around 24 million people over the surgery, breast implants, rhinoplasty, facelifts, Botox, medical age of 40 in 2015, this is expected to increase to almost 55 spas, hair transplant etc. million by 2050. > Increase in Private Sector Share: The government is >> Increasing Insurance Penetration: At present approximately expected to encourage the private sector to take a leading 57% of people are insured, mainly with two publicly role in providing healthcare services, as the public sector administrative insurance companies. In 2016 a new law, struggles to keep pace with the burgeoning population’s significantly expanding insurance coverage for all Egyptian healthcare demand. citizens, was submitted to the government for consideration. This is expected to boost the domestic healthcare market. >> Lifestyle Diseases: Lifestyle diseases are on the rise. Some key statistics: • Diabetes: 6.5% of the total population. Colliers International Egypt • 5% of the population. Hypertension: Healthcare Overview provides • Obesity: 33.1% of the population suffer from obesity; women with 45% and men with 21.4%. a brief snapshot of the key factors • Hyperlipidemia: 38.6% of the population suffer from impacting the Egyptian Healthcare raised cholesterol levels. • Accidents: number of road accidents in Cairo during 2013 sector and its future outlook. was 13,957, a 24% increase from 2012. • Stroke: The volume of patient deaths from stroke has risen over the last 10 years, increasing from 28,800 in 2002 to 33,600 in 2012.
4 Egypt Healthcare | The 7TH Pulse | 2017 Colliers International Healthcare Advisory & Valuation Services team is solely focused on healthcare related business (OpCo) and real estate (PropCo), from complex medical business related operational advisory to real estate related advisory. Our group has the experience and knowledge essential to providing forward thinking solutions to any challenging healthcare related decisions where success is measured in high quality care delivered in a cost effective way.
Hospitals
Daycare / Surgery Centers
Medical Clinics
Health / Medical Parks
Laboratories
Long Term Care / Rehab Centers
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USP
Market Research | Market Entry & Expansion | Equity & Debt Fund Raising Highest & Best Use Study | Market & Financial Feasibility Study Operator Search and Selection | Land, Property & Business Valuations
Egypt Healthcare | The 7TH Pulse | 2017 5 Population and Healthcare Analysis
Kafr el-SheikhDakahliaDamietta Port Said Alexandria Demographic Sharqia Gharbia Beheira North Ismailia Monufa Sinai Overview Qalyubia Cairo Matrouh Suez Faiyum South At 91.5 million, Egypt is North Africa’s largest Beni Suef Sinai country ranked 15th in the world in terms of Giza largest population, equivalent to 1.2% of the world’s Minya population. The population, growing at an average rate of 2.2% per annum, will continue to fuel demand Assiut for infrastructure and services, including healthcare, having a direct impact on the evolving urban Sohag landscape.
Population Qena Luxor For administrative purposes, Egypt is divided into Density twenty-seven governorates: Cairo with 9.3 million by Governorate New Valley 2 people has the highest population in the country, 20 representing 10.2% of the total, followed by Giza 50 Red Sea (7.9 million) and Sharkia (6.8 million), 8.6% and 90 200 7.4% respectively. 4000 Persons/Sq km Aswan About 95% of the country’s population live along the banks of the Nile and in the Nile Delta, which is located at north of Cairo, and along the Suez Canal. These regions are among the world’s most densely populated, containing an average of over 3,820 Gharbia 5.4% persons per square mile (1,540 per km²). Suhag 5.3% Alexandria 5.4% Asyout 4.9% Kalyobia The major governates/cities Cairo (100%) and 5.8% Alexandria (98.8%) have very high urbanization, Menia Menoufia 4.5% 5.9% while Giza is mixed of both urban and rural Fayoum 3.7% population, having 58.6% of urban population. Behera Kafr-El-Sheikh 3.6% 6.6% Others Qena 3.6% 27.8% Beni-Suef 3.3%
Other 9.2% Egypt’s large and growing Dakahlia 6.7% population will continue
Sharkia to fuel demand for 7.6% Giza Cairo Healthcare Projects 8.6% 10.2%
Source: CAPMAS, Colliers International Research 2017
6 Egypt Healthcare | The 7TH Pulse | 2017 Average The changing Household Size population profile
Historical & Projected Population 3.9
The population of Egypt has increased from 27.1 million in 1960 to 91.5 million in 2015, an increase of 3.4 times in the last 55 years, with a CAGR of 2.2% per annum.
Based on World Bank projections, the population is expected to increase to just Population over 151 million by 2050. Density Egypt (P/km2) Population Growth (1960 –2050)
HISTORICAL PROJECTED 160 3.0% 91.4 140 2.5% 120 2.0% 100 Median Age 80 1.5%
60 Population M Population 1.0% 40 Current
0.5% Growth) (Annual Population 20
0 0.0% 1960 1970 1980 1990 2000 2010 2015 2020 2030 2040 2050 25.5 Total Population Population Growth (CAGR)
In 2015, the total population in Greater Cairo stood at 17.2 million; accounting for 18.7% of the total Egypt’s population. Growing at a CAGR of 2.0% per annum, Greater Cairo’s population is estimated to reach 19.4 million by 2020 Male Female and 35.5 million by 2050. This represents a 19.3% and 23.5% of the total Egypt’s population respectively.
Cairo & Giza Population (2010 – 2050) 160 25% 140 51% 49% 120 20%
100
80 15% Egypt Total
Population M Population 60 Population 40 10% Egypt Population % of Total (2015) 20
0 5% 2010 2015 2020 2030 2040 2050
Rest of Egypt Giza Cairo Giza (%) Cairo (%) Giza+Cairo (%) 91.5 M
Expanding population, coupled with a rising average income, will continue to feed demand for healthcare, as well as for infrastructure, energy, water, telecoms, technology, housing, education and financial services. Source: CAPMAS, Colliers International Research 2017
Egypt Healthcare | The 7TH Pulse | 2017 7 1.7% Silent Generation Lifestyle 6.2% Baby Boomers diseases 17.8% Gen X 32.6% Gen Y The Raise of Generation X, Y & Z 41.7% Gen Z and its Impact on Healthcare Demand Diabetes prevalence (% of population ages 20 to 79) in 2015 Lifestyle diseases (also sometimes called diseases of longevity or diseases of civilization) 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 are diseases that appear to increase in 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 frequency, as countries become more 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 industrialised and life expectancy increases. 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14 14
12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 As a result of urbanisation and the rise of 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 disposable income, there has been an increase 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 in chronic diseases such as diabetes, coronary 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 problems and other obesity-related illnesses. 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4
Recently the rate of diabetes related illnesses 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 has witnessed an unprecedented increase in 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 the MENA Region.
In 2015, there were 415 million people with diabetes in the world, out of which more than UK KSA UAE USA Qatar China Egypt Oman Japan Turkey Kuwait 35.4 million were in the MENA Region. By Jordan Bahrain Sweden Lebanon 2040 this number will rise to 72.1 million. Germany Switzerland According to the WHO, in Egypt in 2015 the diabetes prevalence rate was 16.7% among the Obesity prevalence rate among adults as of 1 January 2014 country’s population between the ages of 20-79 42 years, a total of 7.8 million cases of diabetes. 32,7 32,9 33 33 33,1 33,2 As shown in the chart, the Egypt’s diabetes 30 26,9 27,4 27,8 prevalence rate is significantly higher than in 25,1 some of the developed countries. 20,9 17,5 18,6 In Egypt obesity prevalence rate among adults is 33.1%, higher than in some developed 5 5,7 countries, and also one of the highest in the MENA region.
The prevalence of hypertension among adults UK KSA UAE USA Qatar China Egypt Oman Japan Turkey Kuwait Jordan Bahrain Sweden in Egypt stands at 24.9%, which is one of Lebanon Germany highest in the world. Switzerland Hipertension prevalence rates (above 18+), 2015
Common diseases of longevity 40 40 35 35 >> Alzheimer's disease, >> Atherosclerosis, 30 30 >> Asthma, 25 25
>> Some kinds of cancer, 20 20
>> Chronic liver disease or cirrhosis, 15 15 >> Type 2 diabetes, 10 10 >> Chronic Obstructive Pulmonary Disease, >> Heart disease, 5 5 >> Metabolic syndrome, 0 0 >> Chronic renal failure,
>> Osteoporosis, UK KSA UAE USA Qatar Egypt Oman Latvia Turkey Kuwait Jordan Croatia Canada >> Stroke Bahrain Hungary Hungary Lebanon Lithuania Singapore
Rep of Korea Rep Source: World Health organization, Colliers International Research 2017
8 Egypt Healthcare | The 7TH Pulse | 2017 Changing Population Profile
0.3M 1.5M 5.4M 80+ 1.1% 1.7% 3.6% 75-79 70-74 1.5M 5.7M 17.7M 65-69 5.5% 6.2% 11.7% 60-64 55-59 50-54 4.3M 16.3M 31.8M 45-49 15.9% 17.8% 21.0% 40-44 35-39 30-34 7.5M 29.8M 45.3M 25-29 27.7% 32.6% 30.0% 20-24 15-19 10-14 13.5M 38.2M 50.9M 05-09 49.8% 41.7% 33.7% 00-04
2000K 1000K 0 1000K 2000K 6M 4M 2M 0 2M 4M 6M 6M 4M 2M 0 2M 4M 6M 1960 2015 2050 A changing age profile will have significant impact on demand for healthcare services and expenditure.
Analysing the demographic trends, it is estimated that Egypt’s population will change from Baby Boomers to Generation X, Y & Z. This shift would impact disease patterns as well as the type of healthcare services required.
As can be seen in the above exhibit, there is significant change in the Egypt’s population between 1960 and 2015 and it is expected to change further between 2016 and 2050.
The Percentage of Population between 0 to 19 during 1960 and 2015 has 0 decreased from 49.8% to 41.7%, and is expected to decrease further to 33.7% By 2050, around 85 million by 2050. However, as a result of an increase in the total population, those will be born in Egypt, between 0 to 19 years have increased further from 13.5 million in 1960 to increasing demand for mother 38.2 million in 2015, which is expected to increase to 50.9 million in 2050, and childcare related services the accumulative effect creates demand for healthcare facilities and services and facilities. relating to mother and childcare (obstetrics, gynaecology, paediatrics, etc.), 19 alongside the common prevailing communicable and some non-communicable diseases.
The Percentage of Population between 20 to 39 has increased from 20 27.7% in 1960 to 32.6% in 2015, which is expected to decline slightly to 30.0% by 2050. In real terms, the increase in total population from 91.5 million to 151 million, which will change the age profile with those between 20 to 39 years will be even more significant, totalling to around 45.3 These diseases result in the million in 2050 comparing to 29.8 million in 2015. development of chronic diseases, specifically heart disease, This age group is very critical for the existing and future disease pattern irritable bowel syndrome, chronic and health expenditure. obstructive pulmonary disease and Non-communicable diseases (NCDs), including cardiovascular diseases, some types of cancer. diabetes, cancer and chronic respiratory diseases, normally take shape within this age group and are currently the leading national causes of 39 death in Egypt, estimated to account for 82% of all deaths and 67% of premature deaths in the country.
Source: World Health Organization, Colliers International Research 2017
Egypt Healthcare | The 7TH Pulse | 2017 9 Netherlands Czech Republic 50 The graph represents a percentage of USA Korea healthcare expenditure’s distribution by age for four different developed 40 countries – Czech republic, Korea, Netherlands and USA. Distribution of Expenditure on Healthcare by age In 2014 in Egypt the per capita 30 expenditure was US$ 178, with a total estimated expense of US$ 16 billion on the healthcare sector. Based on 20 the current percentage distribution at current prices, total expenses on healthcare is expected to increase to almost US$ 26 billion in 2050 for a 10 population of 151 million. However, as result of change in the population % of expenditure on healthcare % of expenditure distribution with people having longer 0 life profile compared to 2015, the total expenditure on healthcare could reach US$ 44 billion in 2050. 0-19 20-39 40-59 60-74 75+ Years The data for USA is for the age groups 0-19, 20-44, 45-54, 55-64 and 65+ Years
The Percentage of Population between 40 to 59 in 2015 (almost 4 times increase). This is expected to 40 witnessed a slight increase from 15.9% to 17.8% between double to 31.8 million by 2050. 1960 and 2015, and further expected to rise to 21.0% by 2050. The increase of total population resulted in In the next three decades, as the young population of a significant increase of population between 40 to 59 Egypt ages, there is likely to be a sharp rise in healthcare years, i.e. from only 4.3 million in 1960 to 16.3 million demand, with 80% of healthcare requirements typically 59 occur after the ages of 40-50.
60 The Percentage of Population between 60 to 74 One of the biggest changes in Egypt’s population profile increased from 5.5% to 6.2% and is expected to double to is the change in life expectancy, which has increased 11.7% by 2050. from 46.8 years for males and 49.3 years for females in 1960 to 69.2 years and 73.6 years for males and In terms of absolute numbers, the input of population in females respectively in 2015. This will reach 75.0 years age brackets between 60 to 74 years increased from for males and 79.3 years for females by 2050. only 1.5 million in 1960 to 5.7 million 2015 (almost 4 times increase), which is expected to increase further by more In 1960, in Egypt the total number of population in age than three times to almost 17.7 million in 2050, comparing brackets over 65 years was just above 1 million, which to 2015. increased to 4.8 million in 2015 and is expected to be 74 almost 16 million by 2050.
These changes will lead to increasing requirement of a larger number of long term care (LTC) facilities. The minimum requirement for LTC beds in developed The percentage of Population above 75 witnessed a slight countries is in the range of 4-6 beds per 1,000 75+ increase from 1.1% to 1.7%, which is expected to increase population above 65 years (in some countries, by more than three times to 3.6% by 2050. The overall it is as high as 12 to 15 beds). increase of total population will have significant impact on population above 75 years, resulting in increase from only Applying these benchmarks, Egypt currently needs 0.3 million in 1960 to 1.5 million in 2015 and to almost 5.4 around 19,000 beds dedicated for LTC, this is expected million in 2050. to reach almost 64,000 LTC beds by 2050.
Source: Colliers International Research 2017
10 Egypt Healthcare | The 7TH Pulse | 2017 Healthcare Overview of Egypt
Egypt Ministry of Health and Population (MoHP) – Operating Structure
Government Sector Teaching Hospitals and Ministry of Heath Health Insurance (HIO) Institutes Organization (THO) and Population Public / Parastatal Sector in Egypt Curative Care Other Government and Organization (CCO) Public Sector Agencies Private Sector
Source: Ministry of Health and Population, Colliers International Research 2017 Composition of Hospitals and Bed Supply by Sector – 2014
41 125 33 074 Egypt has a diverse health system with numerous public 32% and private healthcare providers. 25%
Egypt’s healthcare sector is regulated and governed by the Number Ministry of Health (“MoH”), also known as Ministry of Health of beds 56 701 and Population (“MoHP”). The above exhibit depicts three 43% separate divisions of healthcare facilities in Egypt, managed by the MOHP.
In 2014, there were a total of 2,062 hospitals with around 391 131,000 beds. 19% 268 Public or parastatal sector is the largest in term of beds, Number of 13% operating almost 57,000 and 268 hospitals in Egypt. The hospitals sector is represented by other government and public sector 1403 agencies, such as Health Insurance Organization (HIO), the Government Sector Curative Care Organization (CCO), the Teaching Hospital and 68% Parastatal Sector Institution Organization (THO). Private Sector The government sector provides an additional 41,000 beds.
The private sector is fragmented with 33,000 beds in 1,400 Average size of hospital by sector hospitals. (in beds ) – 2014 300 The overall average number of beds per one hospital was 212 105 beds in government sector, 212 beds per one hospital 200 in public or parastatal sector and only 24 beds in private sector, this clearly indicates that private sector offering 105 100 is very fragmented, doctor driven instead of brand driven 63 and offers opportunities for consolidation, merger and 24 acquisition. 0 Government Parastatal Private Total
Source: CAPMAS, Colliers International Research 2017
Egypt Healthcare | The 7TH Pulse | 2017 11 Healthcare Facilities, Resources and Services
Growth in Beds Number of beds in Egypt by sector, 2011 - 2014
During 2011 – 2014 number of public / 120 000 parastatal beds remained more or less the same while the number of beds in the private sector grew at a CAGR of 4.1% 100 000 during the same period. Adding almost 3,700 new beds, indicating demand for the private sector. 80 000
However, the number of beds per 1,000 population (1.5 beds / 1,000) remains 60 000 low compared to other countries in the region and significantly lower compared to Number of beds Number 40 000 the developed countries and even world average of 2.7 beds / 1,000 population, thus offering opportunity for expansion. 20 000
However, the ratios of physicians and nurses per 1,000 population remain 0 2011 2012 2013 2014 competitive, when compared to both regional and international benchmarks. Government Parastal Private Sector Sector Sector
Key Healthcare Indicators (per 1,000 of population) – 2014
14.0 13.5
12.0
Physicians 11.2 10.0
Nurses 8.0 8.2 8.1 Beds 6.0 5.2 4.0 4.1 3.6 3.1 3.2 2.9 2.7 2.8 2.7 2.8 2.6 2.7 2.6
2.0 2.5 2.2 1.8 1.5 1.4 1.2
0.0 0.8
Egypt Germany Jordan KSA Sudan Turkey UK USA Source: CAPMAS, World Health Organization, Colliers International Research 2017
12 Egypt Healthcare | The 7TH Pulse | 2017 3.8% 3.7% Outpatient Encounters in clinics of general hospitals 3.7% 5.0% in public sector by Governorate in 2015 5.6% 3.6% 3.5% The adjacent exhibit depicts the number of 5.7% outpatients in clinics of general hospitals in the public 3.2% sector. 5.8% 2.9% 27.5% 2.4% 6.2% The total number of outpatients in clinics in general 11.9% hospitals in the public sector was 59.3 million. 6.7%
Sharkia had the highest volume of outpatients at 6.1 7.3% 10.2% million, followed by Giza at 5.2 million and Cairo at 8.8% Beni-Suef Fayoum 4.3 million. Dakahlia Menia Greater Cairo, which comprises of Giza, Cairo and Qena Other 6th October City, had a total volume of 9.6 million of outpatient encounters. Sharkia Suhag Gharbia Giza Kalyoubia Behera Numbers represent only outpatients in clinics in general (incl. 6th October City) Asyout Alexandria hospitals in the public sector. Total numbers of outpatients and Cairo Menoufia inpatients for all three sectors are not publicly available. Ismailia Kafr-ElSheikh
3.9% 3.9%
5.9% Outpatient Encounters in clinics in Specialized 3.9% 6.2% Hospitals by Governorate in 2015 3.9% 3.7% Outpatients in clinics in specialized hospitals in 8.0% 3.5% Greater Cairo reached a total of approximately 2.7 million in 2015, of which 1.9 million were in 38.1% 8.7% Cairo and 0.8 million were in Giza (including 6th October city). Alexandria had the second largest 23.3% volume of patient encounters (1.3 million) in 10.4% specialized hospitals after greater Cairo. 14.9%
With the advance in medical science, most Asyout surgeries are now being performed as day Kalyoubia Kafr-ElSheikh procedures. This has been a key reason for Fayoum the strong growth of the outpatient Other Cairo Behera encounters in Cairo. Alexandria Menia Gharbia Menoufia Giza Damietta (incl.6th OctoberCity)
1% 2% Top 10 Causes of Death in Egypt in 2010 2% On overall basis, the proportion of deaths as a 3% 21% Ischaemic heart disease result of communicable diseases has declined. Stroke 4% However, the lack of of safe drinking water Cancer and sanitation has resulted an increase of both Cirrhosis 4% hepatitis B and C cases. Lower Respiratory Infections Non-communicable diseases (NCDs) are the main Chronic Obstructive 9% 14% Pulmonary Disease cause of death estimated to be over 82% of total Chronic Kidney Disease deaths in Egypt. 9% Road Injuries Hepatitis The adjacent chart, the top 10 causes of death in Diabetes Egypt, shows that main causes of death are non- communicable diseases (NCDs).
Source: CAPMAS, Colliers International Research 2017
Egypt Healthcare | The 7TH Pulse | 2017 13 Health Expenditure Compared to developed nations the per capita expenditure on healthcare was very low, i.e. Switzerland spent US$ 9,674, which is highest in the world, United Kingdom had US$ 3,935 and other Total expenditure on health as a percentage of GDP was 5.6% in countries had over US$ 4,000. 2014, representing a decrease from 6.3% in 2011. Egypt needs to make major changes in its policy to come closer to The health expenditure per capita in 2014 was US$ 178, some of its neighboring developed and GCC countries, requiring a representing an increase from only US$ 37 in 1995, US$ 64 in major shift in composition of healthcare market, which is at present 2005 and US$ 126 in 2010, with total expenditure on healthcare highly depended upon private sector. estimated to be around US$ 16 billion. Therefore, the health expenditure per capita grew at a CAGR of 8.6% between 1995 The healthcare market in Egypt is mostly a private sector driven and 2014, which is quite significant. However, in 2014 it was market, where almost 62% of the total expenses are spent by only above US$ 178, compared to over US$ 1,000 in most of the private sector and only 38% are spent by public sector, with 90% GCC countries, for example UAE’s had health expenditure per out-of-pocket expenditure as a percentage of private expenditure capita of US$ 1,611. on health in 2014. Healthcare expenditure per capita [USD] Healthcare expenditure per capita [USD] (1995 – 2014) in Egypt in 2014 – World Comparison
total expenditure per capita expenditure in developed countries, 200 50% 10 12% expenditure growth (Y-o-Y) expenditure in the MENA region countries expenditure growth between 1995- 2014 (CAGR) 10% 8 150 8% 6 6% 100 0% 4 4%
50 0 0% UK KSA UAE USA Egypt Oman 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sudan France Kuwait Jordan Canada Bahrain
0 -50% Lebanon Germany
Health Expenditure Ratios in Egypt – 2014 General government expenditure Private expenditure on health as a on health as a percentage of total percentage of total expenditure on expenditure on health health General government expenditure Private prepaid plans as a percentage on health as a percentage of total of private expenditure on health 38.20 5.59 90.07 61.80 1.55 5.64 government expenditure % % % % % % Total expenditure on health as a per- Out-of-pocket expenditure as a percent- centage of gross domestic product age of private expenditure on health
Population of Egypt covered by the HIO Health Insurance Sector (in thousands) – (2010-2014) 50 194 The Health Insurance Organization (HIO) is the primary provider 50 000 of insurance in Egypt, established by the MOHP in 1964 as 48 678 a parastatal government-owned establishment with intent to 48 000 provide health insurance coverage to all Egyptians. 46 814 46 876
In 2010 the number of people, covered by the HIO, was 45 46 000 45 005 million growing at a CAGR of 2.8% and reached 50.2 million in CAGR: 2.8% 2014. The HIO covers employees, retirees and widows of publicly 44 000 owned institutions and some private-sector, newborns and schoolchildren. 42 000 2010 2011 2012 2013 2014 In 2016 a new law was submitted to the government for consideration. The new bill intends to cover 100% of all Egyptians including business owners, expatriates and casual workers. The However, the new law faces numerous difficulties, facing objections of low imposes compulsory monthly payments (subscriptions) for the Doctors Syndicate. all, ranging from 1 to 4% of the whole monthly income. This is significantly higher than current payments, withhold from only Currently it is not clear when the new law will will be implemented. part of salary. Additionally, the individuals will be responsible But once it is introduced, the expand of insurance coverage for for payment of monthly subscriptions for their family members, all Egyptian citizens will have a positive effect on healthcare including an unemployed wife and each of the kids expenditures and further increase the demand for healthcare (2% and 0.5% respectively). services. Source: CAPMAS, World Health Organization,Colliers International Research 2017
14 Egypt Healthcare | The 7TH Pulse | 2017 Healthcare / Medical Cities and Parks
Across the region and in Egypt specifically, there is a new trend in developing Healthcare / Medical driven Mixed Use Developments, known as “Healthcare Cities / Parks” or “Medical Cities / Parks”, with retail, residential, commercial and hospitality developments. Those components can work together to form a successful destination.
Hospitality Retail
Cairo is known to be a local and regional medical A number of new malls in the GCC region have tourism hub, attracting patients from Africa and the incorporated day surgical centers. Some of the GCC. Traditionally, medical tourists were accompanied key examples are Mediclinic Day Surgery center in by one or more family members and the length of stay Dubai Mall and Ibn Battuta Mall. Such healthcare was between 3-15 days depending on the treatment. facilities within or in close proximity to retail centers providing easier access for patients. Apart from medical tourists, the market is also witnessing an inflow of visiting physicians from Waiting time at healthcare facilities can usually regional and global markets, on a periodic basis. range between 30 minutes to an hour. It is Physicians generally prefer staying in hotels and a common practice for a family member, serviced apartments in close proximity to the accompanying the patients, to indulge in shopping healthcare facility, which will be beneficial to the during the waiting time. “Healthcare Cities / Parks” or “Medical Cities / Parks”.
Impact of Healthcare on Other Sectors
Residential Offices The healthcare offering will have positive impact Healthcare has a positive impact on the office on the residential sector as number of doctors sector. Businesses relating to healthcare generally and staff prefer to live in close proximity of the prefer to have their office complex in close to healthcare facilities. healthcare facilities.
Egypt Healthcare | The 7TH Pulse | 2017 15 Impact of Healthcare & Wellness on Second Homes
HEALTH & WELLNESS
High prevalence of lifestyle diseases in Egypt, along with growing awareness among affluent consumers, leads to Egyptians looking for resorts that offer more than just spa packages. In order to create a destination, developers can also offer health driven wellness and healthcare facilities, which are likely to increase absorption, occupancy levels within the development and enhance price premiums.
FITNESS/SKILL RETREATS
Destination-based fitness camps are gaining popularity especially within the younger generation Y and Z. There are two components: health retreats that promote lifestyle changes and One of the drivers for Egyptian property investment academies focused enhancing group skill techniques. The fitness is a hedge against inflation. The recent devaluation industry is upgrading with fitness slimming getaway programs and currency fluctuations increased residential prices approximately by 20% (in EGP terms) year-on-year, in holiday locations. With obesity levels increasing across the supported by an undersupplied residential market. region, it is likely that Egypt’s holiday home market has capacity to absorb this product within the developments. Along with the demand for primary accommodation, a second tier within the residential market has emerged over the last decade. Holiday or vacation homes have become a popular investment and lifestyle choice and will continue to be underpinned by the volume of products and choices available to consumers, both in RETIREMENT COMMUNITIES terms of location and price points. With approximately 10% of Egypt’s population above the age Sustaining high occupancy levels all year round in of 65 and the affluent community representing 2% of the total second home destinations can be challenging. Colliers population, need for retirement homes has been on the rise. has witnessed these challenges being addressed through introducing healthcare and wellness driven There is an established pattern across international markets for resorts, long-term care and rehabilitation facilities. developing retirement communities that provide the look and feel These facilities will have a positive impact on of vacation homes. There is a potential for Egyptian developers to occupancy levels by attracting not only vacationers, look at capitalizing on such concepts within their developments. but also retired households and those seeking longer holidays within proximity to healthcare facilities.
While seasonality is part of the story, it can also be due to the lack of ‘pull factors’. These ‘pull factors’ include REHABILITATION CENTRES proximity of hospitals, clinics, long-term rehabilitation centers, wellness retreats, fitness/ skill retreats and With the decline of the nursing home model of care and the retirement homes. growth in more assisted living options, long-term rehabilitation
There is an opportunity within the holiday home centers have become a common phenomenon across market for developers to create destinations, by international markets. Developers can integrate new real estate providing essential community infrastructure. products, targeting retirees as well as those looking for longterm care and having on-the-ground amenities.
16 Egypt Healthcare | The 7TH Pulse | 2017 Conclusions Demand Gap
Between 2010 - 2014 Egypt had on average 1.5 beds per 1,000 almost 48,000 beds between existing requirementt and supply in population, which decreased to 1.46 in 2015 and 1.36 in 2016, number of beds in 2014). which is quite low comparing to world average of 2.7 beds per 1,000 population. The ratio of doctors per 1,000 population of 3.3 There were a total of 310,741 doctors in Egypt during 2016, is quite impressive, however, there is a shortage of specialized i.e. 3.3 doctors per 1,000 population, a significant improvement doctors and para medical staff due to relocation of high quality compared to 2010, when the ratio was 2.8. However, if we doctors to GCC and Western countries. Colliers has projected the assume that the future ratio will remain at 3.3 doctors per 1,000 demand for total number of beds and clinics required till 2050 population, Egypt will require additional 36.000 doctors by 2020 under the two scenarios: and almost 203,000 doctors by 2050, creating a great demand for clinic space. Currently, most of this demand is surveyed by >> Scenario 1 (Beds) – applying Egypt’s average ratio (between establishing clinics in residential, offices and retail shops, which 2010 - 2014) of 1.5 beds per 1,000 population, usually provide healthcare services of poor quality. Colliers has >> Scenario 2 (Beds) - applying other countries ratio of 2.0 beds observed developing of dedicated healthcare clinics / daycare per 1,000 population. surgery centers and centers of excellence as one of the main growth opportunity in Egypt. >> Scenario 1 (Clinics) – 75% of total doctors working in public or private sector or having their own business run clinics on The current cost of construction for a Grade A hospital is full time or part time basis. in the range of US$ 1,500 / sqm to US$ 2,000 / sqm, while >> Scenario 2 (Clinics) - 50% of total doctors working in public the gross area per bed ranges from 90 sqm to 120 sqm and or private sector or having their own business run clinics on investment in medical fit-outs ranges between US$ 80,000 to full time or part time basis. US$ 100,000 per bed.
Thus, the number of beds in 2014 was around 131,000 with 1.5 beds The following exhibits represent the number of additional beds per 1,000 population. However, in order to improve the healthcare and potential investment in real estate and healthcare business services in Egypt both in terms of quality and quantity, Egypt needs (medical fit-outs, medical equipment etc.), which are required to increase the beds ratio per 1,000 population to 2.0 beds at a to cater to the demand of the growing population during minimum. This will create demand of around 179,000 (a gap of upcoming years:
Egypt Healthcare | The 7TH Pulse | 2017 17 Demand Forecast Demand Forecast – Beds & Required Investment – Clinics & Required in Real Estate & Medical Fit-outs Investment in Real Estate
Additional Doctors and Dentists Required At Egypt in 2015 Avg. of At Projected Avg. of at 3.3 Doctors / 1,000 Population 1.5 2.0 Dentists Doctors beds /1,000 population beds /1,000 population 2020F 2030F 2050F 203,000
2020F 2030F 2050F 178,000 90,000 175 150 36,000 40,000 8,000 18,000 110,000 102,000 100 Additional 77,000 Beds 51,000 50 of Doctors of Doctors Required 26,000 IF % Having IF % Having 0 50 Own Clinics 75 Own Clinics
2020F 2030F 2050F 40
24.0 – 42.7 Clinic Space 30 Required
20 Investment 14.8 – 26.4 13.8 – 24.5 M sqm Required in 10.3 – 18.4 2020F 2030F 2050F Real Estate 10 6.9 – 12.3 10 3.6 – 6.3 Billion USD 0 7.3 – 9.1 8
6 + 4.8 – 6.1 2020F 2030F 2050F 3.3 – 4.1 20 4 2.2 – 2.7 14.2 –17.8 1.3 – 1.6 2 15 0.8 – 1.1 0 Investment 8.2 – 10.2 10 Required 8.8 – 11.0 in Medical 6.1 – 7.7 Fit-outs 4.1 – 5.1 5 Investment Required Billion USD 2.1 – 2.6 0 Billion USD
F F F = 2020F 2030F 2050F 2020 2030 2050 60 4 2.5 – 3.6 38.2 –60.5 50 3 40 1.7 – 2.4 2 23.6 – 37.3 30 1.1 – 1.6 22.0 – 34.8 0.8 – 1.1 16.5 – 26.1 20 1 TOTAL 0.5 – 0.7 0.3 – 0.4 Billion USD 11.0 – 17.4 10 0 5.7 – 9.0 0
18 Egypt Healthcare | The 7TH Pulse | 2017 Market Opportunities
The healthcare market continues to grow in Egypt, primarily due to the demand from continuously increasing Additional Doctors and Dentists Required population in general, which is expected to reach 151 million by 2050, gradual increase in elderly population at 3.3 Doctors / 1,000 Population volume specifically (from current level of 7.8% to 15.3% by 2050) and increase in health insurance coverage. Every year Egypt needs a minimum of 2,500 (1.5 beds / 1,000 population) to 3,500 (2 beds / 1,000 population), resulting in a requirement of additional 26,000 to 77,000 new beds by 2020 (and between 102,000 to 178,000 beds by 2050, a considerable increase), thus offering ample opportunities to invest in the healthcare sector of Egypt. The rising volume of elderly population and burden of lifestyle diseases are expected to increase the demand for the following facilities:
Centers of Excellence / Daycare Primary Care Centres Owing to the large population in Egypt and high As a result of advancement in healthcare occupancy rates of the hospitals, the country technology (for example, such as laparoscopy) requires more primary care clinics and medical a number of daycare surgeries (treatments / centers to meet the demand of the rising procedures) significantly increased, resulting in population. higher demand for daycare surgery centers. Laboratory and Diagnostic Center Moreover, an increase in number of lifestyle Standalone laboratories and diagnostic centers are diseases, such as diabetes, obesity, depression, required in Egypt to support the increasing volume strokes, heart related alignment, blood pressure, of outpatient facilities. etc., globally and in Egypt specifically.
Such daycare surgery centers and Centers of Medical Tourism Excellence can be part of a large office complex Egypt has earned a strong reputation within the region and even retail centers or malls, requiring from of having quality doctors and infrastructure at a “cost 3,000 sqm to 5,000 sqm space. effective” fees. Moreover, the visa access is also quite easy comparing to some of the regional competitors. Long Term Care/ Rehabilitation One of the biggest changes in Egypt’s population This has helped the country to earn a reputation profile is an increase in life expectancy, which of a medical tourism hub in the region, attracting has increased from 46.8 years for males and tourists mainly from North, East and West Africa & 49.3 years for females in 1960 to 69.2 years and GCC, which increases the utilisation of the existing 73.6 years for males and females respectively in healthcare facilities. 2015 and expected to reach 75.0 years for males Beauty & Cosmetic and 79.3 years for females by 2050. Increasing income and population, becoming more The total number of population above age of 65 aesthetically aware, have resulted in a growing years in Egypt in 1960 was only above 1 million, demand for beauty and cosmetic related treatments, which increased to 4.8 million in 2015 and such as body contouring, anti-aging, lipoplasty expected to be almost 16 million by 2050. (liposuction), eyelid surgery, breast implants, rhinoplasty, facelifts, Botox, medical spas, hair Based on the market benchmarks, Egypt requires transplant etc., which have created demand for presently around 19,000 dedicated LTC beds, which large number of beauty and cosmetic centers in are expected to increase to almost 62,000 LTC upscale areas in Cairo and elsewhere. beds by 2050.
In summary, the healthcare sector in Egypt, especially private number of market participants through traditional funding options, such healthcare sector, offers several lucrative opportunities for developers, as debt and equity raising, or emerging funding options, such as OpCo / investors and operators. However, it also possesses number of PropCo, or a Joint Venture (JV) with an investor and REITs. challenges, such as high capital cost, brain drain of qualified doctors and paramedical staff, especially to GCC countries. With over 500 offices in 68 countries, and centres of excellence platforms across the globe, Colliers International brings together global Colliers International works with a number of market players to assist innovations with in-depth local knowledge. For further inquiries, please them in their expansion plans, either by expansion of existing brand or contact Mansoor Ahmed, Director (MENA Region) for Healthcare, attracting international brands to the region. Colliers also assists to a Education & PPP on [email protected]
Egypt Healthcare | The 7TH Pulse | 2017 19 For further information, Operating from please contact:
Ian Albert 68 countries on Regional Director Middle East and North Africa Valuation and Advisory 6 continents [email protected]
Mansoor Ahmed Director $2.6 billion Middle East and North Africa in annual revenue Development Solutions, Healthcare, Education & PPP [email protected] 2 billion Karim Helal square feet under management Country Director | Egypt [email protected] 15,000 professionals and staff Colliers International | MENA Region
Dubai | United Arab Emirates +971 4 453 7400
About Colliers International
Colliers International is a global leader in commercial real estate services, with over 15,000 professionals operating in 68 countries. Colliers International delivers a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-most recognized commercial real estate firm in the world. In MENA Colliers International has provided leading advisory services through its regional offices since 1996. Colliers International currently has five corporate offices in the region located in Dubai, Abu Dhabi, Egypt, Qatar, Riyadh and Jeddah. colliers.com/egypt
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