Investing In Medical Real Estate

Healthcare property development is a high barrier to entry proposition, as befits the market that the sector serves, which includes acute and sub-acute hospitals. So what is critically important when serving this market?

“Very important is obtaining the trust and buy-in of medical specialists,” says Michiel Scharrighuisen, director at Giflo. “The other element is to engage, listen and understand the doctors needs and provide workable solutions. The most important factor is a fair and sustainable rental proposal.”

In 2018, Growthpoint Properties launched Growthpoint Healthcare Property Holdings and announced a R2.4-billion portfolio. Dr Linda Sigaba, fund manager of Growthpoint Healthcare Property Holdings attributes their success to collaboration and strong working relationships. “These specialist developments are tailor made,” says Dr Sigaba. “They require turnkey solutions to enable their effective and efficient functioning and an excellent experience. The entire process is undertaken in close consultation with operators, doctors, and other stakeholders.”

COVID-19 has drawn attention to shortcomings in the provision of healthcare. “The pandemic has highlighted critical gaps in South Africa’s healthcare sector,” says Dr Sigaba. “We believe that we could play a role in closing them. For instance, the need for private sector hospital beds in traditionally under-serviced areas like townships, and the smaller provinces.”

Giflo has not changed their approach during the pandemic. “We remain as committed to our existing projects and positive about our future projects as we were before,” says Scharrighuisen.

Who is playing within this space

The Growthpoint Healthcare Fund is the first unlisted healthcare fund to invest exclusively in healthcare property assets in South Africa. The investment mandate is to acquire and develop acute, day and specialist hospitals as well as laboratory and pharmaceuticals manufacturing and warehousing facilities.

The specialised surgical hospital development by Growthpoint and Cintocare became the first healthcare property on the African continent to be awarded a Green Star Rating, receiving 5 Green Star Custom Healthcare design certification from the Green Building Council South Africa (GBCSA).

“We will be proud to take ownership of this clinical centre of excellence on completion,” says Dr Sigaba. “Growthpoint also completed the 52-bed expansion of Busamed Hillcrest Private Hospital in January, which added much needed surgical and medical capacity to the busy healthcare facility.”

Lockdown delayed construction of the Cintocare Pretoria Head and Neck Hospital. Opening has been rescheduled for January 2021.

Giflo is especially proud of their pilot purchase, Cormed Hospital which they expanded and renovated. “The significance was a solution-based approach to engage collectively and individually with various shareholders,” says Scharrighuisen, “earning their vote of confidence to participate in a facility they have been creating for 30 years and trusting our involvement therein.”