Dubai, UAE – The health care market in the Gulf Cooperation Council (GCC) region is set to experience unprecedented growth, with expenditures projected to reach USD 135.5 billion by 2027. This rapid expansion is driven by several factors, including increased localisation efforts, rising population, higher incidence of non-communicable diseases, and advancements in medical infrastructure and digital health services.
JLL, a leading professional services firm specializing in real estate and investment management, has been at the forefront of advising key players in this sector. The firm recently facilitated a significant transaction where a consortium led by UAE-based Fajr Capital acquired a 65% stake in Aster DM Health care’s GCC operations. This move underscores the growing investor confidence in the region’s health care sector.
GCC’s Driving Forces Behind the Healthcare Boom
The health care expenditure in the GCC is projected to grow at a Compound Annual Growth Rate (CAGR) of 5.4% from 2022 to 2027. This growth is supported by the region’s expanding population base, escalating treatment costs, and rising medical inflation. Moreover, the penetration of health insurance is increasing, further bolstering the sector.
Countries such as Saudi Arabia and the UAE are leading this growth, expected to dominate the region’s health care expenditure with a combined market share of 80% by 2027. The ongoing economic diversification agendas of these nations are crucial in transforming the health care landscape, focusing on infrastructure development, clinical capabilities, human capital development, digital transformation, and the establishment of health care innovation hubs.
Strategic Investments and Expansion
The acquisition by Fajr Capital, advised by JLL, highlights the strategic investments pouring into the health care sector. Sandeep Sinha, Head of Health care Consulting – MEA , emphasized the importance of these investments, stating, “The GCC’s health care expenditure is projected to reach USD 124 billion in 2028. Under their economic diversification agenda, countries in the GCC are driving the transformation of this critical sector with infrastructure development, clinical capabilities, human capital development, digital transformation, and establishment of health care innovation hubs.”
This acquisition is expected to bolster Aster DM Health care’s expansion plans in key markets such as the UAE and Saudi Arabia. The company aims to unlock value within the GCC’s dynamic health care landscape and enhance access to quality services through both physical and digital channels.
Challenges and Opportunities
Despite the promising growth, the GCC’s health care sector faces challenges, particularly in insurance penetration and market fragmentation. According to Alpen Capital, insurance penetration in the GCC stands at approximately 1.9%, significantly lower than the global average of 7.4%. This low penetration rate is partly due to the fragmented nature of the market, which has led to intense pricing competition and operational challenges for insurers.
However, there are high hopes for the health insurance market in the region. Increased economic activity, the rollout of mandatory medical coverage plans, and the economic diversification efforts by GCC governments are expected to drive demand and medical inflation, ultimately benefiting the insurance industry.
Future Outlook
The health care sector in the GCC is on a robust growth trajectory, with substantial investments and strategic initiatives paving the way for a more sustainable and self-sufficient health care ecosystem. It’s continued involvement in commercial, technical, and operational due diligence, business planning, feasibility studies, and market entry strategies will be crucial in streamlining transaction processes and enhancing the competitiveness of the region’s health care brands.
As the GCC region continues to attract more private equity investments and witness an increase in active deal-making, it is poised to become a key player on the global health care stage. The region’s focus on innovation, infrastructure development, and digital transformation will be instrumental in shaping the future of health care in the Middle East.
About JLL
JLL (NYSE) is a leading global commercial real estate and investment management company, helping clients buy, build, occupy, manage, and invest in various properties. With operations in over 80 countries and annual revenue of $20.8 billion, It’s 108,000 employees leverage a global platform combined with local expertise to shape the future of real estate for a better world.
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