- Life science real estate has been booming since the pandemic began
- 17.4% year on year growth
- While accounting for 1% of transactions in the region, globally this figure is 4%
New CBRE Research that highlights growing occupier and investor demand for specialised life sciences real estate has ranked Melbourne among the top-five cities in Asia Pacific for this growing sector.
The report – New Era of Life Sciences Growth: Opportunities for Occupiers and Investors – evaluates key trends, demand drivers, corporate real estate strategies and investment opportunities for the industry.
The life science industry is diverse; the pharmaceutical biotechnology, medical equipment, food science and healthcare sectors are forecast for strong growth in Asia Pacific. Currently, there has been 17.4% year-on-year growth in the volume of life science office leasing. By contrast, the overall Asia Pacific leasing market declined by 25% year on year.
Since the onset of the pandemic, the report notes that there has been a strengthening focus on research and development within the sector which has fuelled competitiveness among the regions top life science hubs. It is expected there will be a growing number of sale-and-leaseback transactions, public-private sector partnerships and repositioning of ageing light industrials into cold storage facilities or laboratories.
As one of the top five hubs in the region, Melbourne is noted for its advanced and innovative manufacturing of pharmaceutical and medical technology products, strong logisitics networks and university-backed research capabilities. The University of Melbourne is currently ranked second globally for university-related biomedical research.
Nationally, Melbourne attracts 40% of national medical funding and is the base for 41% of life science companies in Australia.
Shanghai is ranked first followed by Tokyo and Singapore, which both rank high owing to their infrastructure, talent pool and protection of intellectual property. Beijing and Melbourne follow suit.
“Australia is on track to becoming a world leading life sciences hub, driven by technological advancements in biotechnology and support from the Federal Government, which has identified the life sciences sector as a strategy priority, particularly in a post COVID world,” said CBRE’s Pacific Head of Capital Markets, Mark Coster.
“Australia’s world class healthcare system and an established network of highly regarded universities and research institutions have ensured the country’s appeal to global life sciences companies, with established clusters in Sydney’s Macquarie Park, Parkville in Victoria and expanding hubs in Brisbane, Perth, Adelaide and the Gold Coast.”
Mark Coster, CBRE
Dr Henry Chin, the Global Head of Investor Thought Leadership and Head of Research, APAC, for CBRE, added that given life science transactions account for less than 1% of annual investment activity in the region, there is significant potential for growth, as globally this sector accounts for around 4% of activity.
“While life sciences real estate is at a nascent stage of development as an investible asset class, there is significant potential – particularly in the Asia Pacific region,” said Mr Chin.
“The obvious entry route is via sale and leasebacks as multinational pharmaceutical companies recycle capital for R&D activities or offload non-essential assets following mergers and acquisitions.”