New Delhi, December 9, 2021: India has the potential to create a demand for approximately 96 million sq. ft. of life sciences research and development real estate during this decade. Consequently, the life sciences research and development real estate universe holds the potential to attract private equity institutional investment amounting to approximately USD 18 billion (INR 1,350 billion) over the same period, as per to the latest report “On a Booster Dose: Life Sciences Real Estate” by Savills India, a global property consultancy firm.
The report works out alternative scenarios for conservative and optimistic cases wherein the potential demand for life sciences real estate ranges from approximately 72 million sq. ft. – 152 million sq. ft. respectively.
Key findings of the report:
- Over the next decade, Savills India estimates the requirement of the life sciences R&D real estate universe in India to grow to somewhere between USD 16 billion (INR 1,200 billion) and USD 34 billion (Rs2,550 billion) as per Conservative and Optimistic scenarios. Realistically, the requirement is estimated to be around USD 21 billion (Rs 1,575 billion).
- The COVID-19 pandemic accelerated deal activity and confirmed investor interest in life sciences and healthcare companies. Venture Capital funding into the life sciences industry in India stood at USD 448 million (Rs 34 billion) in 2021 through August, almost 3x of the annual average of the last 5 years.
- Life sciences cap rates are currently higher than similar-quality office cap rates. Further, strong growth in demand for the life sciences sector coupled with the unavailability of core assets during the initial phase of development is likely to drive higher rental growth offering attractive returns to investors.
|Rent (USD/Sq.ft/Year)||Cap Rate||USD Price per Sq.ft|
|Life Sciences R&D||11-16||8%-9%||138-178|
(Source: Savills India Research)
“Lifesciences has firmly established itself as a predominant part of the new global economy pushed by increased Private Equity Funding and catalysed by the COVID-19 pandemic. Aided by exponential global demand growth, geopolitical environment, policies initiatives and skilled workforce, India is on the path to becoming a major global contributor for this sector. Consequently, Life Sciences R&D real estate is emerging as a high-potential asset class for institutional investors. This segment will play a pivotal role in the overall growth of the Indian Real Estate industry” said Diwakar Rana, Managing Director, Capital Markets, Savills India.
World Economic Forum suggests that COVID-19 is perhaps not the last pandemic and that better preparation is needed to fight future disease outbreaks. As a result, we believe that life sciences research funding could increase both to fight the current COVID-19 pandemic, and to build a better infrastructure for future
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