European Life Sciences sector primed for growth in 2024 driving real estate demand and investment opportunities

The European Life Science sector has been marked by strong growth and resilience in recent years and is set for significant expansion in 2024, driven by new medical treatments and both private and public funding according to JLL’s Life Sciences Industry & Real Estate Perspective report. With rising demand and limited supply, there are opportunities for investors to meet the varying real estate demands of companies as broader portfolio strategies are increasingly required for long-term growth.

Over the past five years, the number of newly formed Life Science companies has risen by an estimated 13.5% across Europe, with double-figure growth seen in Switzerland (+17%), the United Kingdom (+15%) and Germany (+15%).

George Beaton, Head of Life Sciences Research, EMEA, JLL, said: “Despite a slowdown in company creation in 2022 and 2023, the life science sector continues to grow. Over the last two years, the industry has been going through a relative consolidation period following strong growth. M&A activity has been rising since 2021 as large pharmaceutical companies target innovative start-ups. We expect this momentum to continue into 2024 as a result of the forthcoming ‘patent cliff’, which will see $51.2 billion in revenues exposed to generic or biosimilar competition in the next six years. As such big pharma companies are looking to ensure they can renew their novel drug pipeline for the years to come.”

From a real estate perspective, the ‘Golden Triangle’ of London, Cambridge and Oxford is set to continue its dynamic expansion with new dedicated supply reaching the market, offering more options to corporates in need of lab space. Clusters across Europe, like Paris and Berlin-Potsdam are leading the way and are expected to maintain strong momentum as new developments become available. Barcelona, Stockholm-Uppsala, and the Medicon-Valley are also very strong and established markets where opportunities will arise. Other hotspots include Ghent, Rhein-Necker and Lyon which progressed from emerging to established markets last year, and smaller markets with strong potential including Birmingham, Bristol, Hamburg and Geneva.

Key factors underpinning growth and driving demand

JLL’s research points to three important drivers of growth and real estate demand this year:

  • Three new medical treatments: GLP-1 agonists for weight loss, antibody-drug conjugates and radio pharma, have been in development for two decades and are now showing potential for significant clinical efficacy and profitability. These developments, alongside many other promising candidates, will create demand for lab space but also manufacturing facilities and distribution centres which will scale up with the commercialisation and growth within these treatments.
  • Venture capital investment: As inflationary pressures ease and amid predictions of a more stable macroeconomic outlook for the year ahead, venture capital investment is expected to increase and drive expansion. Additional capital raised by start-ups that have already received initial funding is expected to be the main driver of this. It will likely be most pronounced in the UK, with $14.7 billion of venture capital funding targeting UK Life Science companies from 2020 to 2023 – accounting for more than a third of all VC investment registered across the wider Europe region during this period. France ($6.8 billion), Switzerland ($4.7 billion), Germany ($4.1 billion), and the Netherlands ($2.5 billion) follow.
  • Government funding: The impact of government investment and publicly funded projects will continue to support real estate growth across Europe, encouraging the establishment of multiple Life Sciences research and development hubs like the ‘Golden Triangle’. The impact of the Horizon Europe scheme, which the UK has re-entered this year, is expected to contribute to sector growth and collaboration across borders.

Limited supply drives investment opportunities

Despite the strong demand for Life Sciences space across Europe, there is still insufficient stock. For instance, across the ‘Golden Triangle’ real estate market in the UK, lab vacancy remains very low at approximately 1% for Cambridge and London and 4% for Oxford.

Across most of continental Europe, the Life Science investment market is still relatively nascent with labs still considered an alternative asset class. However, increasing demand and limited supply are driving investor interest in the rental model of lab stock, particularly in multi-occupancy lab space which is highly sought-after. Partnerships between investors and developers are also increasing and proving successful in delivering fit-for-purpose stock to the market that meets specific local requirements.

Alexander Nuyken, Head of Life Science Markets, EMEA, JLL, added: “With new drug treatments, government schemes and greater availability of venture capital given a more positive macro-economic outlook, the Life Science sector across Europe is primed for growth this year. There is a clear opportunity for real estate investors to take advantage of the supply-demand imbalance, particularly in established markets like London, Paris and Berlin but also across the broader 41 European cluster life sciences ecosystem, and in emerging markets like Birmingham and Barcelona.


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