Evergrande Group, one of China’s largest real estate developers, will soon be developing private hospitals in the country under a cooperation agreement with Harvard University.
Harvard and Evergrande jointly announced the agreement, which was signed on Monday, which calls for the university to provide management and medical personnel for facilities to be invested and built by Evergrande. No monetary figures were disclosed in the statement.
The cooperation deal for development of the medical facilities in China was announced on the same day that Harvard revealed a large gift from Evergrande to the university. The endowment provides for the creation of the Evergrande Center for Immunologic Diseases at Harvard Medical School and Brigham and Women’s Hospital.
In addition to the medical aspect, Evergrande’s gift also provided for the establishment of two other new initiatives at the university, the Harvard Center for Green Buildings and Cities at the Harvard Graduate School of Design, and the Center for Mathematical Sciences and Applications in the Faculty of Arts and Sciences. Evergrande’s funds will go to support programs, facilities, and a research endowment.
Harvard Venturing into Hot Market
The move to enter China’s medical care industry marks Harvard’s first establishment of a care facility outside the United States. The university has affiliations with 17 hospitals and research institutes in the US and is known for the quality of its medical school.
While China’s healthcare industry was traditionally protected from foreign investment, significant liberalisations were made at the end of 2011 which allow for direct investment by foreign entities into joint venture hospitals.
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.
Real Estate Developers Branching Out
Evergrande’s move into the healthcare industry comes as China’s real estate developers strive to find creative investments for the billions of renminbi they have accumulated during the country’s property boom, particularly as the industry may be increasingly regulated in the future.
The Guangzhou-based firm is among China’s ten largest property developers. The Hong Kong listed company is owned by billionaire Xu Jiayin (Hui Ka Yan in his native Cantonese), who is said by Forbes to be China’s 13th richest person.
Besides its successful real estate business, Evergrande is known as the owner of Guangzhou Evergrande Football Club. In November, the club became the first Chinese team to win the regional AFC Champions League, thanks to the owner’s liberal spending on foreign stars such as Dario Conca, and coach Marcello Lippi.
Competing developers such as Dalian Wanda and Greenland Group have made high profile ventures into overseas real estate, with Greenland already establishing significant success at selling Australian homes to Chinese buyers.
Will Other Developers Check Into the Hospital Market?
Earlier this year, SOHO China Chairman Pan Shiyi made a low profile visit to the Mayo Clinic in the United States, for unspecified purposes. The Mayo Clinic is one of the most famous health care institutions in the US, but is also known for its successful geographic expansion including having opened facilities in Mexico, and establishing relationships with medical providers in China and India.
The ability to develop medical facilities in cooperation with foreign healthcare providers seems to be an attractive opportunity for many Chinese developers, so watch this space for more hospital developments in the future.