Ageing Population Rising Healthcare Needs Fuel Demand Singapore Life Sciences Real Estate Cbre

here.Singapore’s biomedical manufacturing sector is set for continuous growth, which will drive momentum in the country’s biomedical sector, ultimately boosting the demand for research and development (R&D) and specialised manufacturing spaces, according to real estate consultancy CBRE.

In a recent research report, CBRE predicts a sustained growth for the biomedical manufacturing sector in Singapore. Over the past two decades, this sector has experienced a significant increase in output, reaching $39.7 billion in 2023 based on data from the Department of Statistics. This translates to a compound annual growth rate (CAGR) of 8.3%, which is the highest among all manufacturing sectors in the country and more than double the overall CAGR of 4.1%.

One of the main drivers of this growth is the strong performance within the pharmaceutical industry, which has recorded a CAGR of 6.3% from 2000 to 2023 and produced $19.6 billion worth of pharmaceuticals in 2023. The medtech industry has also contributed to this momentum with a remarkable output CAGR of 11.8% and a production value of $20.1 billion in 2023.

Looking ahead, CBRE predicts that this growth will continue in the coming years, driven by long-term structural factors such as an ageing population, rising healthcare costs, and the increasing demand for medical devices and digital healthcare services. Globally, the biopharma market is expected to grow at a CAGR of 6% and reach $1.385 trillion by 2028.

Furthermore, CBRE notes that life sciences companies are focusing on their core growth areas, such as medtech, R&D efficiency, and biologics, by divesting non-core arms like consumer health units. This trend is expected to create a strong demand for specialised facilities in Singapore that can accommodate research labs and biotech manufacturing plants.

As a result, Singapore has established itself as one of the top end-to-end hubs for life sciences in the Asia Pacific region, alongside cities like Shanghai, Beijing, Tokyo, and Melbourne. According to CBRE, the city-state is classified as a “comprehensive market,” offering a complete value chain for life sciences, including manufacturing plants, R&D facilities, cold storage and specialised warehouses, and front office operations and regional headquarters.

Singapore’s developed infrastructure, political stability, business-friendly policies, skilled workforce, and favourable intellectual property laws have also attracted a majority of the top global biopharma and medtech companies. Some of the major players in the industry, such as Pfizer, GSK, and Roche, have a long-standing presence in the country, while recent years have seen an influx of investments and expansions.

In 2021, Singapore secured a record $1.77 billion in biomedical investment commitments, driven by the COVID-19 pandemic and the increasing demand for vaccines. Even though the investment activity has normalized since then, CBRE points out that the trend remains on an upward trajectory over the long term. In 2023, the country received approximately $900 million in investment commitments.

Startups have also contributed significantly to Singapore’s biomedical sector, with over US$3 billion in venture capital funding invested in nearly 500 biomedical startups in recent years.

Currently, Singapore has about 37.4 million sq ft of industrial spaces designated for the life sciences sector, accounting for 6.6% of the total industrial space in the country. These facilities are concentrated in three major clusters, namely Biopolis, Tuas Biomedical Park, and Singapore Science Park.

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Biopolis, first launched in 2006 in the one-north precinct, offers over 2.4 million sq ft of prime business park space, including labs, R&D facilities, and offices. Some of the notable occupiers include Abbot, Danone Nutrica Research, and Eli Lilly. The latest addition to the cluster is the 12-storey Elementum building, completed in the fourth quarter of 2023, with an occupancy rate of 90%.

Tuas Biomedical Park, opened in 1997, is a 280-ha site that currently houses major tenants such as Pfizer, Sanofi, GSK, GE Healthcare, and Wyeth. The park offers land allocations for tenants to develop built-to-suit manufacturing facilities, with essential infrastructure such as power, water, and sewage readily available. Following the pandemic, several new manufacturing plants were announced by existing tenants, and more expansions are expected in the coming years.

Singapore Science Park, established in 1980 on a 30-ha site in Queenstown, is the oldest among the three clusters. The park has a leasable area of about 5.3 million sq ft, with approximately 33% occupied by life sciences. In June 2023, CapitaLand Development (CLD) unveiled plans for a new $1.37 billion life sciences and innovation cluster at Singapore Science Park, called Geneo. When completed in 2025, Geneo will add over 1.9 million sq ft of gross floor area, including 861,000 sq ft of purpose-built infrastructure for biomedical R&D.

CBRE also notes that a life sciences sub-cluster is emerging in the Kallang area, offering high-spec industrial buildings in a city-fringe location. This area is home to offices for companies like GenScript Biotech and 10x Genomics.

Investing in life sciences real estate is an attractive proposition for investors, given the resilient demand from occupiers, limited supply, and long-term growth potential. In CBRE’s 2024 Investor Intentions Survey, healthcare-related assets ranked as the most popular alternative sector, beating data centres and student housing. However, opportunities for investment are rare, as most assets in the Asia Pacific region are purpose-built and self-owned by institutions.

In Singapore, business parks are mostly held by REITs or government-linked companies and are rarely traded on the open market. As a result, CBRE suggests that investors can consider acquiring land sites or properties with redevelopment potential near existing life sciences clusters or explore opportunities in the secondary market, such as acquiring existing life sciences properties from institutional owners or structuring sale and leaseback arrangements with life science organizations.