APAC life sciences real estate investment hits US$18b in the last five years

There is approximately 100m sq ft of total leasable area within the life sciences sector as of end-2022.

An ageing and more health-conscious population, solid occupier demand, and strong investor interest, are driving the growth of life sciences hubs across Asia Pacific, according to the latest CBRE research. 

While the major life sciences companies’ revenue growth has slowed after a period of significant expansion during the COVID-19 pandemic, the industry’s longer-term development is driven by the underlying trend of an ageing and more health-conscious population. Life sciences hubs have been established in Shanghai, Beijing, Tokyo, Singapore, and Melbourne, with major new developments in Shanghai Lingang Life Sciences Park, Hong Kong Lok Ma Chau Loop, and Labzone Bangalore Life Sciences Park in coming years. 

Investment demand is strengthening with investment funds raising US$18 billion to invest in life sciences real estate in the past five years. A shortage of assets available for sale limited volume to just US$717 million in 2022, less than 1% of Asia Pacific’s total commercial real estate investment volume. 

“As most life sciences facilities are purpose-built and self-owned by life sciences companies or government institutes, investors should consider forming joint ventures with landlords and life sciences operators to invest in the sector. This has been done in both emerging markets such as China and India as well as mature markets including Singapore, Australia and Japan,” said Dr. Henry Chin, Global Head of Investor Thought Leadership, Asia Pacific, for CBRE. 

“Investors can also partner with developers or big pharmaceutical companies to participate in green field development or build-to-suit facilities, or with government bodies for new life science park developments. Another investment approach is to target life sciences-related assets by extending investment scope to medical offices, healthcare projects and manufacturing plants,” Dr. Chin added. 

Life sciences clusters in Asia Pacific have been expanding substantially in recent years, with total leasable area growing to over 100 million sq. ft. Rent performance has been resilient due to solid occupier demand.

“Life sciences companies in the Asia Pacific have a robust appetite for laboratory space to support R&D activity,” said Ada Choi, Head of Occupier Research, Asia Pacific, for CBRE. “As R&D capabilities expand, we expect to see the proliferation of new manufacturing plants with enhanced productivity and operational efficiency, facilitating the production of new blockbuster drugs.” 

“As most life sciences firms have turned cautious toward leasing space, many are preferring to make use of flexible workplace arrangements to accommodate hybrid work, such as hotdesking, activity-based working and flexible office providers,” Ms. Choi added. 

To read the full report, click here.