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Healthcare segment neglected by Indian developers

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Bottom Line: Healthcare may not be happy hunting ground for the Indian developers due to issues ranging from ROI to operational non-competence and lack of policy incentives. However, some first movers are finding the going smooth and once it is tested successfully in the integrated townships, the Indian real estate may adopt it as a serious business venture ahead.  

Healthcare, Medical facilities, Hospitals, Healthcare and real estate, Medical facility by developers, Hospitals inside housing complex, India real estate news, Indian property market, Track2Realty, Track2Media ResearchA Pune-based developer commissioned a project feasibility study to one of the leading property consultants who advised not to plan a healthcare centre in his residential project. Though the consultant while assessing the viability of proposed/planned development maintained that the focus on social infrastructure would add premium to the project, yet healthcare was kept aside of the otherwise integrated approach.

Reason: it may not be feasible for the developer to break even from operating standpoint, added to the fact that the society by and large maintains aesthetically a distance from hospitals and, as the consultants pointed out people may not be comfortable staying at a place where one may have to see deaths as well.

This project feasibility study in one of the upcoming projects in Pune is not a case in isolation. The real estate developers traditionally have not invested enough in the healthcare projects. In recent times, the slowdown coupled with the fact that the developers are looking at left, right and centre to differentiate their projects from the rest have shifted their focus on healthcare facilities within the residential project, yet it seems ifs and buts galore in healthcare investment of real estate.

It seems even the social taboo is giving way to pragmatic approach, at least in urban India where in the hustle bustle life healthcare is given top priority, people would like to have medical facilities closer to their homes. Having a medical centre close to their houses means less time taken to cater to emergencies. Hence, some developers are optimistic about the prospects of the healthcare real estate development in India.

Some of the analysts though believe healthcare real estate development is certainly going to add values to the realty project. After all, the awareness about the importance of healthcare is quite high these days. People are more cautious and alert about health in today’s stressed life.

This school of thought asserts in the coming years healthcare real estate development is not only going to complement  the residential real estate housing, but may expect some government norms which may make it mandatory to incorporate healthcare in the residential project soon.

Mostly as of now only the developers of integrated townships have got into the healthcare investment. The dilemma of whether or not to have healthcare facility in the project also comes with whether the developer should himself get into the operational side of running it or it should be outsourced post the investment.

Not everyone though subscribes the fact that developer should take control of operational side of healthcare facilities. Mostly developers seek to opt out of operational role on the completion of healthcare project, due to lack of their core competency in specified area. Of course, there are developers managing multiple business wish to explore & run the operational role themselves with such an organization.

In Mumbai Nahar Group in its integrated township Amrit Shakti in Chandivali has created this healthcare structure by introducing a well equipped medical centre–Nahar Medical Centre. Nahar Group’s Vice Chairperson Manju Yagnik says it is very important for a developer to be involved in the operation of the healthcare centre.

If the developer leases it out there are chances that the infrastructure will not be maintained. While if the developer himself is involved the quality is maintained, advance technology will be adopted, proper service and care will be delivered to the customers.

“All sizeable developers have developed healthcare projects which indicate that they are not away from healthcare projects. Having stated that we cannot ignore that the ROI is not immediate and it takes around two years to break-even. The investment is also quite high with the cost of infrastructure and state-of-the-art machinery. There is a lack of proper guidance as there are not many institutions who give you an adequate knowledge to set up a healthcare centre. The other factor is you need to have a medical professional on board to get all the required sanctions for your project. More and more developers will surely make an entry into the healthcare development projects if the gap of knowledge reduces and a proper guidance is provided to them,” says Yagnik.

Nikhil Hawelia, Managing Director of Hawelia Group believes the onus for developing social infrastructure including healthcare has often been on the developers across the country. He says responsible developers are already into it as a Corporate Social Responsibility (CSR) and it should not necessarily be seen on the metrics of ROI.

“The future of healthcare investment from expansion of realty portfolio is somewhat uncertain as of now. Though it is expected that the healthcare sector will remain relatively robust because of an aging population and the expansion of health insurance increasing traffic to health care facilities, as a responsible real estate company we are more focussed on our core competence and healthcare is something that we prefer to do more as our CSR initiative,” says Hawelia.

Most developers crib that land cost is the unique and prime issue these days and creating a healthcare project in a big way requires the developer to focus away from his prime role in residential, commercial and retail real estate. This may not be acceptable and feasible for many developers.

Also, creating one such healthcare facility at a township and setting up of healthcare real estate project are different from each other. Unless they are mandated, real estate developers may not find it lucrative, since running a healthcare real estate business requires a focused approach.

No wonder, in India the healthcare investment has only succeeded in integrated townships. The concept of social infrastructure is itself new to the Indian real estate, which has seen a remarkable change in the last two decades.

However, the sector has undergone a massive overhaul in the recent past, with real estate developers opting for non-residential real estate development. With the government encouraging integrated township of more than 100 acres, scope for the healthcare real estate development is expected to widen in the near future.

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