Life sciences drive real estate transactions

liu, tempo Date: 2021-06-29 15:46:40
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Life sciences hubs are driving demand for real estate as the once-niche sector expands rapidly, according to a CBRE report.

While a cluster for life sciences activities has been established at Sydney’s Macquarie Park, there is scope for expansion at the Westmead, Randwick and Liverpool health precincts.

In Melbourne, the inner-city precinct of Parkville is well-marked with a life sciences focus, while the Melbourne Airport Business Park is expected to house large-scale facilities in coming years.

Life sciences clusters

Life sciences clusters are emerging in Brisbane, Perth, Adelaide and the Gold Coast as well.

The sector straddles a variety of real estate types, from pharmaceutical logistics to manufacturing facilities, from corporate offices and laboratories. Its expansion has a big upside for the property sector.

In 2020, there was a 17.4 per cent year-on-year growth in the volume of life sciences office leasing in the Asia-Pacific region, compared to a 25 per cent decline in the overall leasing market, according to the report.

Mark Coster, CBRE’s Pacific head of capital markets, said Australia’s healthcare system, universities and research centres were all helping to attract global life science firms.

“This is underpinning investor interest in life sciences real estate, as highlighted by Sigma Pharmaceuticals 2020 sale of cold storage facilities in Brisbane and Sydney to Logos Property for $172 million and Charter Hall’s recent $106 million acquisition of GlaxoSmithKline’s life sciences campus at Boronia in Melbourne’s east,” he said.

ASX-listed Dexus has also made a big push into the sector through an unlisted healthcare fund it manages, with a $140 million deal last month to acquire two life sciences buildings within Melbourne’s Parkville biomedical precinct.

Henry Chin, CBRE’s research chief for the region, said, “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 to circa 4 per cent of deal activity globally.”

Dr Chin said sale and leaseback deals were a clear entry point into the sector as multinational pharmaceutical companies recycle capital for R&D activities or offload non-essential assets following mergers and acquisitions.

“However, we expect other opportunities will include converting older industrial properties into laboratories or cold-storage facilities as well the construction of modern life science facilities under public-private partnership frameworks across the region,” he said.

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