Hong Kong will see rise in demand for medical real estate—here's why

CBRE reported the need for an additional 1 million sq. ft. for medical centres.

Demand for medical real estate is expected to rapidly grow in Hong Kong, which will be driven by the market’s ageing population, increasing spending on medical services as well as wider insurance coverage, CBRE reported. 

CBRE had initially reported in 2019 that medical centres in the city would need an additional 1 million square feet (sq. ft.) of commercial space for expansion. This was, however, delayed due to the volatility of the economy, and changes in policies, amongst others. 

According to CBRE, the “silver hair” population of Hong Kong, or those above 65 years old, is expected to climb to 2.7 million by 2047 from 1.5 million in 2022. 

Medical expenditures, meanwhile, accounted for 6.5% of the city’s gross domestic product per capita in 2019/2020, up from 5.1% in 2009/2010. Moreover, insurers have increased their medical spending in Hong Kong four times to 35% from 8%. 

“Rising IPO and M&A activity within the healthcare sector will also accelerate expansion by medical providers,” Marcos Chan, Head of Research, CBRE Hong Kong, said. 

“Another driving force is the growing pool of medical talent, with the Government setting up a pathway to introduce non-locally trained doctors via the passing of the Medical Registration (Amendment) Bill 2021 in October 2021.”

CBRE noted that the active health sector M&A, coupled with the collaboration of the medical centres and insurance companies are generating new requirements.

With just under 14 million sq. ft. of new supply due to come on stream from 2022 to 2026, Hong Kong’s Grade A office market will provide substantial expansion opportunities for medical occupiers over the next five years.