Ageing Population Rising Healthcare Needs Fuel Demand Singapore Life Sciences Real Estate Cbre
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The biomedical manufacturing sector in Singapore is expected to experience sustained growth, leading to increased demand for R&D and specialised manufacturing spaces. This growth has been highlighted by CBRE in a June research report, which notes the sector’s six-fold surge in output over the past two decades, reaching $39.7 billion in 2023. This corresponds to a CAGR of 8.3%, the highest among all manufacturing sectors in Singapore. The momentum has been driven by the robust performance of the pharmaceutical industry, which saw a CAGR of 6.3% and produced $19.6 billion worth of goods in 2023. Additionally, the medtech sub-sector recorded an “exceptional” output CAGR of 11.8% and produced $20.1 billion worth of goods in 2023.
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The strong growth is expected to continue in the coming years, driven by factors such as an ageing population, rising healthcare costs, and an increasing demand for medical devices and digital healthcare. Globally, the biopharma market is projected to reach US$1.385 trillion ($1.44 trillion) by 2028, growing at a CAGR of 6%.
CBRE also notes that life sciences companies are streamlining their businesses by divesting non-core units and focusing on core growth areas, such as medtech, R&D efficiency, and biologics. This is expected to drive demand for specialised facilities that can accommodate research labs and biotech manufacturing plants.
Singapore is one of a small handful of Asia Pacific cities that has become an end-to-end hub for life sciences. In its report, CBRE classifies Singapore as a “comprehensive market”, which means it offers the entire value chain for life sciences companies. This includes manufacturing plants, R&D facilities, cold storage, specialised warehouses, and front office operations and regional headquarters. Other cities classified as comprehensive markets by CBRE include Shanghai, Beijing, Tokyo, and Melbourne.
Singapore’s developed infrastructure, political stability, business-friendly policies, skilled workforce, and favourable intellectual property laws have attracted a majority of top global biopharma and medtech firms. Pharmaceutical giants like Pfizer, GSK, and Roche have long had a presence in Singapore, and more investments have poured into the biomedical sector in recent years as these companies expand their operations. In 2021, Singapore recorded a record $1.77 billion in biomedical investment commitments, driven by vaccine manufacturers like Sanofi and BioNTech. While investment activity has normalized since then, CBRE notes that it remains on an uptrend over a broader timeframe. In 2023, about $900 million in investment commitments were secured. Startups have also contributed to Singapore’s biomedical space, with over US$3 billion in venture capital funding pumped into nearly 500 biomedical startups in recent years.
Currently, Singapore has an estimated 37.4 million sq ft of industrial spaces dedicated to life sciences, which makes up 6.6% of the total industrial space in the country. These facilities are located in three major clusters – Biopolis, Tuas Biomedical Park (TBP), and Singapore Science Park (SSP). Biopolis, located in the one-north precinct, was first launched in 2006 as an R&D center for biomedical sciences. It currently has over 2.4 million sq ft of prime business park space, including labs, R&D, and office space. Other occupiers include Abbot, Danone Nutrica Research, and Eli Lilly. The latest addition to Biopolis, a 12-storey block called Elementum developed by Ho Bee Land, was completed in 2023 and is currently 90% occupied. TBP, which opened in 1997, is a 280-ha site that is home to tenants like Pfizer, Sanofi, GSK, GE Healthcare, and Wyeth. The park offers land allocations for tenants to build custom manufacturing facilities with essential infrastructure such as power, water, and sewage already available on site, providing “plug-and-play” advantages. Following the pandemic, new manufacturing plants were announced by existing tenants such as Sanofi, GSK, and MSD, which are expected to be completed in the next three years. There have been more expansion plans announced for TBP this year, including a $301 million biologics manufacturing plant by AbbVie and a $346 million facility to produce therapeutic antibody drugs by Novartis. In March, China’s WuXi Biologics broke ground on a new 13.5 ha R&D and manufacturing center as part of a $2 billion investment in Singapore first announced in 2022. SSP, the oldest of the three clusters, was established in 1980 on a 30-ha site in Queenstown. In 1993, construction began on Science Park II on a 20-ha plot, which was later expanded by another 15 ha. Today, the park has approximately 5.3 million sq ft of leasable area, with 33% occupied by life sciences companies. The park is currently undergoing extensive rejuvenation, and in June 2023, CapitaLand Development unveiled plans for a new $1.37 billion life sciences and innovation cluster called Geneo. This development, comprising three properties at 1, 5, and 7 Science Park, will add over 1.9 million sq ft of gross floor area by 2025, including approximately 861,000 sq ft of purpose-built space to support biomedical R&D. While most new supply for life sciences real estate will be concentrated at SSP, CBRE notes that a budding life-sciences sub-cluster is emerging in the Kallang area. This area offers high-spec industrial buildings in a city fringe location, and it is home to offices of companies like GenScript Biotech and 10x Genomics.
The resilient demand from occupiers, along with a relatively tight supply and long-term growth prospects, has made life sciences real estate an attractive investment option for investors. In CBRE’s 2024 Investor Intentions Survey, healthcare-related assets were ranked as the most popular alternative sector, surpassing data centres and student-living. However, opportunities to invest in this sector are rare, as most assets in the Asia Pacific are purpose-built and self-owned by institutions. In Singapore, business parks are tightly held by REITs or government-linked companies and are rarely traded on the open market. In 2023, investments in life sciences real estate in the Asia Pacific region totaled US$396 million, representing less than 1% of the total volume that year. Investors looking to enter this sector may consider acquiring land sites or properties with redevelopment opportunities close to existing life sciences clusters, or explore opportunities in the secondary market, such as buying existing life sciences properties from institutional owners or entering into sale and leaseback arrangements with life sciences organizations that currently own their own facility.