Singapore among key drivers of surge in demand for life sciences real estate: CBRE

Singapore is among key drivers of a surge in demand for life sciences real estate in the Asia-Pacific (Apac) due to its competitive life sciences sector, said CBRE Research in a report.

CBRE expects demand to rise for corporate offices, logistics facilities, research and development (R&D) laboratories and manufacturing facilities, which make up the four major components of real estate portfolio for life sciences companies.

It noted that the life sciences sector - which includes the pharmaceutical, biotechnology, medical equipment, food science and healthcare sectors - has "enormous growth potential" in Apac due to large population sizes and a rise in R&D.

It also ranks Singapore as one of the top five in the region for market competitiveness in the life sciences industry.

"Singapore has maintained its competitive position as a biomedical hub - underpinned by its skilled talent pool, logistical network, government funding, as well as existing physical infrastructure to attract life sciences companies and foster a supportive eco-system," said Catherine He, director of research of CBRE South-east Asia.

Apart from Singapore, the report also notes other potential markets including Shanghai, Tokyo, Beijing and Melbourne as key drivers of the surge in demand for life sciences real estate in Apac.

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Shanghai and Beijing have advanced manufacturing and R&D capabilities, and have large domestic markets. Tokyo has a large talent pool and sophisticated infrastructure, while Melbourne also has university-backed research capabilities and strong logistics networks.

Amid the Covid-19 pandemic, a rise in active life sciences investments outside Apac are also driving buyers to the region.

Direct investments remain low in the past two years as most facilities are likely purpose-built and self-owned, hence they have not been made for sale.

But investors remain attracted to the sector on hopes that these properties will be made for sale soon.

"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, where life sciences transactions account for less than 1 per cent of annual investment activity, compared with circa 4 per cent of deal activity globally," said Henry Chin, CBRE's global head of investor thought leadership and head of research for Apac.

CBRE recommends R&D occupiers to leverage on government incentives, while corporate office tenants should capture the weakness in current leasing markets to optimise its portfolio before the market recovers. It also suggests pharmaceutical logistics occupiers could target suitable facilities or collaborate with owners to enhance assets, while manufacturing facilities review facility networks and scale up capacity.