Healthcare realty emerging as next big thing on horizon-III

By: Sanjay Dwivedi

Track2Realty Exclusive

No wonder, the healthcare sector is being adopted by the developers across the country. Property analysts are of the opinion that proximity to a hospital in an area also impacts the price of real estate and many developers use it as USP to market their projects. However, developers who have ambitious plans in hospital realty assert that the future of the real estate market won’t be confined to just tie-ups with the hospitals. Getting into healthcare will be a serious business for the sector with many of the players setting up hospitals with or without tie-ups.

Moreover, with real estate prices skyrocketing in most of the cities, expensive real estate will constrain the hospitals plans to grow without getting into business sharing model with the developers. Citing expensive real estate for the inability to grow, Hinduja Hospital’s CEO Pramod Lele says, “Mumbai has seen entry of many private healthcare providers, but the infrastructure has remained skewed, being poorer in suburban and extended Mumbai.”

Niket Vijay Mehta, one of permanent trustees of the 300-bed Lilavati Hospital, Mumbai, says that structural constraints and lack of space have prevented his hospital from increasing the number of beds. “Without availability of space, increasing the number of beds is not a good idea as it could impact patient care,” he says.

And it is not just a metro phenomenon where the cost of realty is forcing the healthcare chains to tie-up with the developers. Ambuja Realty, the Kolkata-based realty major is planning to start construction on its hospital project in Kolkata by the end of 2011. They had signed a memorandum of Understanding (MoU) as early as in 2006 with the Israel based Elbit Medical Imagine (EMI) group to undertake hospital projects with an investment of Rs 1000 crore. Though the joint venture was called off due to inability to acquire large tract of land, Ambuja group is now treading the path alone.

Harshvardhan Neotia, Managing Director of the company, said, “We have already acquired the land and we are going to invest Rs 250 crore and put up the hospital. Even our 250 bedded hospital in Siliguri is under construction and it would start by the end of the year.”

Factors for the Healthcare Boom in India

• Strong Indian Economy
• Increasing options for Healthcare Financing
• Increasing Opportunities in Healthcare delivery

• Better Profitability (15-20% EBIDTA)
• Earlier Break Even (2-3 years)
• Medical Tourism
• Increasing demand from within the county

• Saturation of other sectors like IT, retail

Box Item-2

Patient Space indicates potential

City Hospital Beds per 1,000 people

• Kolkata–26,0005.79
• Hyderabad–16,000 3.9
• Bangalore–34,0003.5
• Chennai–15,0003.2
• Mumbai–38,0002.9
• Delhi–40,0002.39