Life sciences property is hot, hot, hot. Just announced is a deal which saw Nordic property group Niam sell Thermo-Fisher’s Finnish offices and labs to Intermediate Capital Group. Meanwhile Life Science REIT (the first publicly quoted trust in Europe dedicated to the sector, which floated in London in October) has already closed five deals. Elsewhere Icade has snapped up five Portuguese hospitals. And we are told that 2022 will be the year the big European property REITs target UK nursing homes and hospitals.
Life sciences was the hot property sector of 2022. JLL estimates that the UK life sciences saw £2.6bn of property deals in 2021 and thinks that there was roughly over €5bn of deals in the rest of Europe. “Covid really ignited investor interest the sector,’ says Chris Walters, who heads up the sector for the advisers.
In practice, about two thirds to a half of the sector is the sale of office space occupied by life science, medtech and pharma companies and a third to a half is lab space. Walters says that investors do not always differentiate against lab space in favour of office: “Most want a balanced portfolio focusing on broader innovation and R&D which matches the sector.”
The sector also attracts a premium price with capitalisation rates up to 75 basis points lower than for pure office space. Walters says: “London, Oxford and Cambridge in the UK attract premium prices as larger hubs with a higher concentration of companies perform strongly because of the multiplicity of possible tenants.” Data outlines that together the three cities account for over 75% of all venture capital investments in life sciences in the UK and one third of all life science companies.We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.