- Rapid biotech advances, an ageing population, and record investment levels are creating huge demand for life science real estate.
- Recent transactions and trends in public markets suggests superior total returns and asset pricing for life science relative to other real estate sub-sectors.
- Existing supply is insufficient to meet existing demand even before anticipated growth is factored in.
- The life science sector has strong recession-resistant credentials (in terms of occupancy and NOI performance), although conditions in individual markets can vary depending on supply considerations.
- An increased allocation to life science property may improve long-term performance and risk-adjusted returns for real estate portfolios.
- In our view, given current pricing of completed stock and current supply levels, investors should be able to capture a healthy premium via financing development of new life science real estate.
- Additionally, it provides investors the opportunity to contribute to the growth of an industry that will be vitally important to society over the coming decades.
Two years after the onset of the COVID-19 pandemic, the importance of a high class life science industry is self-evident. Yet the scale of the industry, and the resources required to sustain it, are perhaps still underappreciated.