How the booming medical tourism industry can boost SPH REIT's business

Medical tourist spending jumped 15%.

According to Nomura, Medical suites/offices at Paragon account for 32% of the asset’s total NLA of 0.7mn sq ft currently and the proximity to the Mt Elizabeth Hospital has contributed to its popularity amongst healthcare providers and medical specialists. 

Medical tourist spending grew a compounded 15% a year between 2001 and 2011 and consultant Urbis projects further growth of 8% a year from now to 2018F.

Here's more from Nomura:

Southeast Asian visitors accounted for 73% of the overall medical tourist spending in 2011, with Indonesian visitors alone accounting for 54% of the spending, as per STB data.

As such, we expect demand for Paragon medical suites to remain robust as Singapore continues to be the healthcare hub of the region.

In addition, we see two potential catalysts for SPH REIT, one in the near-term and the other one in the medium-term: