Melbourne has been ranked as one of the top five life sciences hubs in Asia Pacific according to a new CBRE Research report exploring the growing occupier and investor demand for specialised life sciences real estate.

A New Era of Life Sciences Growth: Opportunities for Occupiers and Investors focuses on key trends, demand drivers, corporate real estate strategies and investment opportunities as macrotrends propel the industry into a fresh phase of expansion.

The life sciences industry, which includes the pharmaceutical, biotechnology, medical equipment, food science and healthcare sectors, is forecast to have enormous growth potential in Asia Pacific owing to the region’s large – and in some markets, ageing – population, low health expenditure per capita (representing circa 6 per cent of Asia Pacific GDP versus 17 per cent in the U.S.), and a rise in pharmaceutical research & development (R&D).

This potential is already being evidenced, with organic expansion and flight-to-quality relocations underpinning 17.4 per cent y-o-y growth in the volume of life sciences office leasing in Asia Pacific in 2020, compared to a 25 per cent decline in the overall Asia Pacific leasing market.

CBRE’s report also ranks the competitiveness of the region’s top life sciences hubs and points to a rapid rise in investor interest in the sector, underpinned by a strengthening focus on R&D since the onset of the COVID-19 pandemic.

This is expected to underpin a growing number of sale-and-leaseback transactions, public-private sector partnerships to drive development opportunities and a repositioning of ageing light industrial facilities into laboratories or cold storage use.

The report uses 12 criteria based on four major categories – manufacturing, R&D, pharmaceutical logistics and sales – to rank the competitiveness of major Asia Pacific life sciences markets.

This positions Melbourne among the overall top five Asia Pacific hubs due to its advanced and innovative manufacturing of pharmaceutical and medical technology products, strong logistics networks and university-backed research capabilities, with the University of Melbourne ranked second globally for university-related biomedical research.

The city also attracts 40 per cent of national medical funding and is a base for 41 per cent of all Australian life sciences companies.

In Greater China, Shanghai and Beijing stand out owing to their advanced manufacturing and R&D capabilities and large domestic market. Tokyo and Singapore also rank among the top life sciences markets, due to their sophisticated infrastructure, talent pool and protection of intellectual property.

CBRE Pacific head of capital markets Mark Coster said Australia is on track to becoming a world leading life sciences hub, driven by technological advancements in biotechnology and support from the federal government, which has identified the life sciences sector as a strategy priority, particularly in a post COVID world.

“Australia’s world class healthcare system and an established network of highly regarded universities and research institutions have ensured the country’s appeal to global life sciences companies, with established clusters in Sydney’s Macquarie Park, Parkville in Victoria and expanding hubs in Brisbane, Perth, Adelaide and the Gold Coast,” he said.

“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.”