Hong Kong's private hospitals emerge as new source of demand for commercial and industrial space

Private hospitals have emerged as a new source of tenants in commercial and industrial properties in Hong Kong as they expand their services by setting up "off-hospital" clinics and treatment centres, property consultants say.

"Increasing demand from mainlanders is one of the key drivers," said Charles Chan, Savills' managing director for valuation and professional services. Expected increasing demand from mandatory medical insurance in the city is another key factor, he said.

The government is planning health insurance reform that is aimed at encouraging more people to buy insurance and switch to private doctors or private hospitals. Pressure has been growing on the public health system as the population ages.

Ben Dickinson, head of markets at JLL, also sees rising demand for space from private hospitals. "This is an increasing trend whereby the top-level medical care industry seeks to bring certain service provisions to their prospective clients in-town, rather than have them go to the hospital locations."

Hong Kong Sanatorium & Hospital last year leased 55,000 square feet of office space in One Pacific Place and 20,000 sq ft in One Island South in Wong Chuk Hang, according to property consultants. The hospital also plans to build a 19-storey medical centre on a site set aside for industrial use, in A Kung Ngam, Shau Kei Wan.

Another deal last year saw Hong Kong Integrated Oncology Centre sign up for 30,000 sq ft in Citibank Plaza.

Last month, property investor Lam Chi-fung and his associates sold the whole block of Wilson Logistics Centre in Kwai Chung for HK$933.8 million. Chinese-language newspaper Sing Tao Daily reported that the building was bought by a private hospital, which will use it as a back-up centre, providing laundry services.

Looking ahead, Dickinson said: "It is something we feel we will see more of in the months and years to come."

However, Dickinson did not see growing services demand from mainlanders as a major consideration. "It's just the changing strategy of the providers. They want to bring the services to the market, rather than making the market come to them," he said.