Ageing population, rising healthcare needs to fuel demand for Singapore life sciences real estate: CBRE

Atiqah Mokhtar

10 June 2024 at 6:35 am·6-min read

Life sciences real estate in Singapore are predominantly located in three clusters: Biopolis, Singapore Science Park and Tuas Biomedical Park (Picture: Samuel Isaac Chua/The Edge Singapore)

The biomedical manufacturing sector is poised to see sustained growth, which in turn, will propel momentum for Singapore’s biomedical sector and consequently demand for R&D and specialised manufacturing spaces, according to CBRE.

In a June research report, the consultancy highlights biomedical manufacturing’s strong growth over the past two decades. From 2000 to 2023, the sector experienced a six-fold surge in output to reach $39.7 billion last year, based on data published by the Department of Statistics. Across that period, the sector charted an output CAGR of 8.3% – the highest among all manufacturing sectors and more than double the 4.1% CAGR recorded overall.

The strong growth was partly underpinned by robust performance within the pharmaceutical industry, which registered a CAGR of 6.3% from 2000 to 2023 and produced $19.6 billion worth of pharmaceuticals last year.

The other growth engine has been the medtech industry, which produced $20.1 billion worth of goods in 2023. Between 2000 and 2023, the sub-sector delivered an “exceptional” output CAGR of 11.8%, CBRE notes.

Growth rate of Singapore’s biomedical manufacturing sector (pharmaceuticals + medtech)

This healthy momentum is expected to continue in the coming years, as long-term structural drivers such as an ageing population, rising healthcare costs and earlier diagnosis of chronic diseases such as cancer and diabetes propel universal demand for medical devices and the adoption of digital and AI-assisted healthcare. Globally, the biopharma market is expected to grow by a CAGR of 6% to hit US$1.385 trillion ($1.44 trillion) by 2028.

At the same time, CBRE highlights that life sciences players are increasingly streamlining businesses by divesting non-core arms such as consumer health units to refocus on core growth areas like medtech, R&D efficiency and biologics. This environment bodes well for Singapore’s life sciences real estate market, as demand for specialised facilities that can accommodate research labs and biotech manufacturing plants increase.

One-stop destination

Singapore is one of a small handful of Asia Pacific (Apac) cities that have cultivated an end-to-end hub for life sciences. In its report, CBRE classifies Singapore as a “comprehensive market”, which it defines as cities that can cater to the life sciences’ entire value chain. This includes having manufacturing plants, world-class R&D, a high availability of cold storage and specialised warehouses, and facilities for front office operations and regional headquarters. Other cities that meet CBRE’s threshold are Shanghai, Beijing, Tokyo and Melbourne.

Besides its comprehensive market, CBRE highlights that Singapore’s developed infrastructure, political stability, business-friendly policies, skilled workforce and favourable intellectual property laws have enabled it to woo a majority of the top global biopharma and medtech firms.

Pharmaceutical giants such as Pfizer, GSK and Roche have long had a presence in Singapore, while in recent years, more investments have poured into the biomedical sector as these companies have expanded operations.

In 2021, Singapore logged a record $1.77 billion in biomedical investment commitments as vaccine manufacturers such as Sanofi and BioNTech announced plans for new facilities in the wake of the pandemic. Since then, though activity has normalised, CBRE notes investment activity remains on an uptrend over a broader timeframe. In 2023, roughly $900 million in investment commitments were secured.

Startups have also contributed to Singapore’s biomedical space. According to CBRE, over US$3 billion in venture capital funding has been pumped into nearly 500 biomedical startups in recent years.

Present and upcoming supply

Currently, Singapore has an estimated 37.4 million sq ft of industrial spaces designated for life sciences, which makes up 6.6% of total industrial space in Singapore. The facilities are located across three major clusters in Biopolis, Tuas Biomedical Park (TBP), and Singapore Science Park (SSP).

Biopolis, in the one-north precinct, first launched in 2003 as an R&D centre dedicated to biomedical sciences. Developed in phases, it currently has over 2.4 million sq ft of prime business park space encompassing labs, R&D and office space. Occupiers include Abbot, Danone Nutrica Research and Eli Lilly.

The latest phase at Biopolis comprises a 12-storey block dubbed Elementum that was completed in 4Q2023, adding another 0.4 million sq ft of space. Built by Ho Bee Land, the addition has achieved 90% occupancy as of 1Q2024.

TBP is a 280-ha site that opened in 1997 and is home to tenants including Pfizer, Sanofi, GSK, GE Healthcare and Wyeth. The park offers land allocations for tenants to develop built-to-suit manufacturing facilities. Essentifial infrastructure such as power, water and sewage are already available on site, giving occupiers a “plug-and-play” advantage.

Following the pandemic, new manufacturing plants were announced by existing tenants such as Sanofi, GSK and MSD which are expected to complete over the next three years.

This year, more expansions at TBP have been announced, 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 centre, as part of its $2 billion in investment in Singapore first announced in 2022.

Key statistics of existing supply

SSP is the oldest of the three clusters, first set up in 1980 on a 30-ha site in Queenstown. In 1993, construction began on Science Park II on a 20-ha plot which was subsequently expanded by another 15ha. Today, the park has about 5.3 million sq ft of leasable area, of which some 33% is taken up by life sciences.

The park is currently undergoing extensive rejuvenation. In June 2023, CapitaLand Development (CLD) unveiled plans for a new $1.37 billion life sciences and innovation cluster at SSP called Geneo. Comprising three properties at 1, 5 and 7 Science Park, it will add over 1.9 million sq ft of gross floor area by 2025, including around 861,000 sq ft of purpose-built infrastructure to support biomedical R&D.

While new supply for life sciences real estate will be concentrated at SSP, CBRE notes that a budding life-sciences sub-cluster is also emerging in the Kallang area. Offering high-spec industrial buildings in a city fringe location, the area houses offices for companies including GenScript Biotech and 10x Genomics.

Geneo will add over 1.9 million sq ft of gross floor area to Singapore Science Park (Picture: CapitaLand)

Limited opportunities for investment

The resilient demand from occupiers, coupled with a relatively tight supply and long-term growth prospects; have made life sciences real estate an attractive proposition for investors. In CBRE’s 2024 Investor Intentions Survey, investors ranked healthcare-related assets as the most popultar alternative sector, beating data centres and student-living.

However, opportunities to invest are rare as assets in Apac are mostly purpose-built and self-owned by institutions, says CBRE. In Singapore, business parks are tightly held by REITs or government-linked companies and are rarely traded on the open market. In 2023, Apac life sciences real estate investments totalled US$396 million – less than 1% of the total volume that year.

Nonetheless, investors looking to enter the sector may consider acquiring land sites or property with redevelopment opportunities that are located close to existing life sciences clusters, suggests Rimon Ambarchi, CBRE head of industrial and logistics services for Singapore and Southeast Asia.

Another option is the secondary market, Ambarchi adds. For example, investors can acquire existing life sciences properties from institutional owners or structure a sale and leaseback arrangement with life sciences organisations that currently own their facility but may wish to free up capital.

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Ageing population, rising healthcare needs to fuel demand for Singapore life sciences real estate: CBRE

One-stop destination

Present and upcoming supply

Limited opportunities for investment

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