Life sciences real estate sector enters investment mainstream

Leading diversified professional services and investment management company Colliers has issued a new report examining the surge of investment into life sciences and its implications for the property sector across Europe, the Middle East, and Africa (EMEA), identifying landlord and investor opportunities across established and growth markets as the sector is primed to grow significantly. 

Corporate interest in life sciences has been strong for the past decade, with $81.5 billion invested across EMEA since 2010 and job creation consistently above 5 percent y/y. However, 2020 was exceptional, with the EMEA region seeing corporate investment growth of 72 percent as companies on the front line of the global response to the pandemic ramped up their business activity. This points to the need for property owners and developers to consider the readiness of their assets to support the aspirations of fast-growing life science companies within the commercial real estate; and for investors to pay close attention to emerging life science clusters. 

Most new investment into the sector since 2010 has gone into the manufacturing of pharmaceuticals and medical devices, accounting for 59 percent of capital investment ($33.6 billion) ahead of R&D at 11.4 percent ($15.5 billion). Existing life science clusters have dominated corporate investment over the same period, accounting for 67 percent of activity across Europe, with the Republic of Ireland’s benign tax environment within the EU and multi-billion-euro support for the sector making it a magnet for corporate funds. Other well-established hubs benefitting from this substantial corporate investment include the UK’s “Golden Triangle”, Zurich in Switzerland, Germany’s Bio-Valley, Flanders in Belgium, and Medicon Valley in Copenhagen. However, new clusters are catching up. Spain, Italy, Russia, Poland, and Hungary now feature among the top 20 destination countries, having each surpassed $1 billion of corporate investment in the last 10 years. 

“The life sciences sector is clearly focused around key clusters of expertise and talent, but new locations are expanding, driven by the need of corporates to optimize their footprint and tap into growth markets as the sector expands significantly in relation to traditional industries. The decision by the G7 economies to fix corporate tax at 15% is another factor that is going to re-draw the corporate map, eroding the advantage of some countries and increasing that of others,” Damian Harrington, Colliers’ Head of Global Capital Markets Research and EMEA Head of Research, said.

(WBJ)