The life science sector is set to experience increased activity in the occupational and investment markets in the near future. Venture capital funding into the sector is rising at a rapid pace, and our research shows that for every €1 billion of venture capital money channelled into life sciences, 50,000 sq m of new occupier demand is generated.
There has been over €7 billion invested so far this year in Europe, exceeding the €6.9 billion placed across 2020, according to Pitchbook. At Savills we are seeing a higher allocation of venture capital targeting Germany, Switzerland, France, Belgium and the Netherlands, due to the attractive national investment environment and highly talented domestic organisations.
Venture capital investment tends to create new occupier demand between 12 and 18 months post-funding. This is generally the time a company will look for space for the next phase of their development. On that basis, the €10.2 billion of investment during 2019-20 will lead to approximately 474,000 sq m of new requirements for life sciences assets between this year and next, according to our data. As venture capital funding continues to increase year on year, we expect real estate demand to follow a similar trend.
More investment opportunities are also coming down the line. The disjointed ownership structure that characterises the European life sciences market has meant that there have been limited total transaction volumes across the continent to date. But the weight of capital seeking exposure to the sector will prompt existing legacy owners to realise the value of their properties going forward. We are also seeing an increasing number of life science-focussed development opportunities in key locations throughout the UK and Europe.
Capital markets activity is already increasing in the UK and Europe. We have seen activity in the science park segment, with GIC recapitalising a 40 per cent stake in the Oxford Science Park and CPPIB forming a partnership with Lendlease to develop MIND, a substantial innovation district in Milan on the former EXPO site.
Away from the large scale parks, there is also increasing interest in single asset opportunities in the key clusters throughout Europe. BentallGreenOak and Mission Street have acquired a retail warehouse scheme in a prominent location in Oxford for repositioning into a life science facility, and Corum has completed the acquisition of Beagle Zernike, a purpose-built life science asset in Leiden.
The fundamentals of location and cluster dynamics are so important for life science schemes to be successful, it is therefore imperative to understand the key locations throughout Europe.
Contact Mike Barnes or George Coleman
European life science: emerging hotspots
Savills plc published this content on 08 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 November 2021 15:37:07 UTC.