Singapore’s Perennial Real Estate Holdings on Friday announced its second and third private healthcare projects in China, with plans to add up to 40 such developments across the country.
The announcement of the two projects in Chengdu, the capital of China’s Sichuan province, involved launching separate facilities, one each with local healthcare provider Shanghai RST Chinese Medicine and international hospital operator IHH Healthcare. Total investment in the two healthcare centres is expected to total over RMB 1 billion ($160 million)
The initiative by Perennial, which has traditionally developed residential and commercial real estate in its home market, comes as more developers look to profit from China’s combination of an aging population and rapidly rising disposable income.
Building an Elderly Care Centre in a Model Project
In the first of the two projects Perennial signed a memorandum of understanding with local builder Shanghai Summit Property Development and Shanghai RST Chinese Medicine to set up a RMB 150 million ($22.8 million) eldercare and retirement home in Chengdu.
The Chengdu Xiehe International Eldercare and Retirement Home would be part of the 280,000 square metre Perennial International Health and Medical Hub in the southwestern Chinese city, which the developer says will be the largest integrated healthcare development in western China.
According to Perennial, the Chengdu Health and Medical Hub will serve as a model for a total of 20-40 such healthcare centres across the mainland.
In July of last year Perennial set up its first healthcare development venture in China when it invested S$65 million ($44 million) for a 40 per cent stake in a joint venture with Chinese private hospital operator China Boai Medical Group to set up a healthcare facility in Guangzhou.
Perennial Teams with IHH Healthcare
In addition to the senior care facility, Perennial also announced on Friday that it was joining with IHH Healthcare, Asia’s largest hospital operator by market capitalization, to build a 350-bed hospital as part of the same Chengdu project.
The RMB 900 million ($136.6 million) ParkwayHealth Chengdu Hospital will be developed together with local partner Shanghai Broad Ocean Investments, and is due for completion in late 2017.
Perennial’s plans for a network of dozens of hospitals across China were announced less than one week after property conglomerate Dalian Wanda revealed its own initiative to develop three new healthcare facilities on the mainland.
Under the terms of Wanda’s $2.3 billion joint venture, the developer would work with the UK’s International Hospitals Group (IHG), to build hospitals in the cities of Shanghai, Qingdao and Chengdu.
Other Chinese developers are also entering the healthcare market as the returns available from building homes have slowed in recent years.
In April of 2014 China Vanke chairman Wang Shi announced that his company, which is China’s largest developer by sales, was investing in hospitals in Shanghai, Guangzhou and Shenzhen. Evergrande Real Estate, which is also a top five developer, announced its own plans in February of that same year to cooperate with a hospital belonging to Harvard University to build health care facilities on the mainland.
McKinsey and Company has projected that health care spending in China will grow from $357 billion in 2011 to $1 trillion in 2020, making the industry a major investment target.
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