The growth of life sciences hubs across the Asia Pacific region is being driven by an ageing and more health-conscious population, solid occupier demand, and strong investor interest. Major life sciences companies have experienced a slowdown in revenue growth after significant expansion during the COVID-19 pandemic. Investment demand is strengthening, with investment funds raising $18 billion to invest in life sciences real estate in the past five years. However, a shortage of assets available for sale has limited the volume to just $717 million in 2022. Life sciences firms are preferring to make use of flexible workplace arrangements to accommodate hybrid work. Life sciences clusters in Asia Pacific have been expanding substantially in recent years, with total leasable area growing to over 100 million sq. ft.
Growth of Life Sciences Hubs in Asia Pacific Driven by Strong Investor and Occupier Demand, says CBRE Research
The latest research by CBRE has revealed that the growth of life sciences hubs across the Asia Pacific region is being driven by an ageing and more health-conscious population, solid occupier demand, and strong investor interest. Despite the major life sciences companies experiencing a slowdown in revenue growth after significant expansion during the COVID-19 pandemic, the industry’s longer-term development is being driven by the underlying trend of an ageing and more health-conscious population.
Life sciences hubs have been established in various cities across the Asia Pacific region, including Shanghai, Beijing, Tokyo, Singapore, and Melbourne, with major new developments in the pipeline such as the Shanghai Lingang Life Sciences Park, Hong Kong Lok Ma Chau Loop, and Labzone Bangalore Life Sciences Park.
Investment demand is strengthening, with investment funds raising $18 billion to invest in life sciences real estate in the past five years. However, a shortage of assets available for sale has limited the volume to just $717 million in 2022, which is less than 1% of Asia Pacific’s total commercial real estate investment volume.
Dr. Henry Chin, Global Head of Investor Thought Leadership, Asia Pacific, for CBRE, suggests that 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.
Investors can also partner with developers or big pharmaceutical companies to participate in greenfield 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.
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.
According to Ada Choi, Head of Occupier Research, Asia Pacific, for CBRE, life sciences companies in the Asia Pacific have a robust appetite for laboratory space to support R&D activity. As R&D capabilities expand, we can expect to see the proliferation of new manufacturing plants with enhanced productivity and operational efficiency, facilitating the production of new blockbuster drugs.
Life Sciences Firms Preferring Flexible Workplace Arrangements, says CBRE Research
As life sciences firms turn 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, according to Ada Choi, Head of Occupier Research, Asia Pacific, for CBRE. To read the full report, click here.
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