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Health inequality: Kenya requires $6bn investment in healthcare real estate assets to bring it up to the worldwide average of 2.7 beds per 1000 people Mr Jamal believes that greater emphasis


The company says built-to-suit and lease-


back transactions have morepotential for inves- tors than constructing a facility and then searching for a healthcare operator. Under the firstmodel, the property investor builds a clinic or hospital that meets the exact specifications of an operator, who then pays rent on it. Another option involves management


agreements similar to the hospitality sector: the property investor retains ownership of the hospital building and pays a management fee to the operator. Under this model, the inves- tor rather than the operator has the chance to make the most profit but bears a greater pro- portion of the risk if the business does not succeed.


Healthcare interest “We took a poll during our [Africa healthcare] webinar in June with more than 140 partici- pants comprising all types of property investor, including commercial and industrial. Around 80% were of the opinion that Covid-19 had changed their investment strategy and they will be considering investment in healthcare, either by way of expansion or new investment,” says Shehzad Jamal, partner in healthcare and education at Knight Frank. “Our conversations with investors revealed


that they prefer investing in established busi- nesses and froma pure real estate point of view they would prefer to invest in an existing asset of a reputable healthcare service provider or undertake a built-to-suit project for them with a long lease.”


August/September 2020 www.fDiIntelligence.com


will be placed on public-private partnerships (PPP) in a post-Covid world where African gov- ernments will be even more strapped for cash. For example, in October 2019, under a 30-year PPP arrangement, Kenyatta National Hospital in Nairobi announced plans to construct a $140m seven-storey private hospital to fund public services in the parent institution.


Changing use Other investors are focusing on changing large residential properties, shopping centres or office blocks into private hospitals and clinics. For example, Kenyan private health- care company Avenue Group has converted four floors of the Nakumatt shopping centre in the city of Thika into a modern 100-bed hos- pital, which opened in February 2020. “In smaller cities in Kenya and other east


African countries it is possible to convert a single large dwelling or a school into a pri- mary healthcare clinic,” says Dr Amit N. Thakker, chairman of the trade association Africa Healthcare Federation. “In larger cities, I think we will see office


blocks, shopping centres and multi-storey buildings converted. This can save a lot of money in construction costs.” Some east African nations are likely to


resume their strong economic growth once the Covid-19 crisis passes. Meanwhile, the emergency has brought home to the region’s expanding middle class the need for improved healthcare. ■


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