Australia has traditionally been behind in scientific research commercialisation, but all that is about to change as superannuation funds and offshore capital compete for land and property close to life sciences precincts.
The country is in the midst of a boom in the life sciences sector, with property developers and investors alike flocking to the opportunity.
The life sciences industry, which encompasses the branches of science that involve the study of life, has a broad range of applications across health, agriculture, pharmaceutical, healthcare, and food sciences – and is essential in improving the quality and standard of human life.
Rapid growth in Australia’s life sciences sector is creating a new class of specialist real estate needs.
Specialist buildings co-located with universities and healthcare facilities, also require specialist space requirements including traditional office spaces, labs and production-based facilities.
Given the specialised nature of the industry, this real estate asset class has longer lease terms, and therefore offers investors lower risk assets with a long-term cash flow and reduced levels of rental downtime.
Growth in the sector is closely linked to global healthcare expenditure, which has skyrocketed against the backdrop of the pandemic, according to a report released last month by Colliers and Harrison Street.
There has been 43 per cent growth in the life sciences sector since 2019, according to AusBiotech’s report Australia’s Life Sciences Sector Snapshot 2022.
And in 2021, there were more than $25 billion in life sciences transactions globally.
Although it represents only 2 per cent of the total securitised property market in Australia, total assets under management are valued at approximately $6.5 billion and the total market size is estimated at between $150-$250 billion, according to investment data company Preqin.
HDR is riding the wave of the booming market. The firm specialises in biomedical laboratory design and is currently working on the interior lab design of the University of Sydney and the Royal Prince Alfred Hospitals new $478 million biomedical research facility, alongside architectural practice Denton Corker Marshall.
Research commercialisation essential in the race for talent
HDR’s national director of education and science, Graeme Spencer, Spencer says research commercialisation is “a big gap in the market” and although Australia has a strong track record of research, it is “behind the world” on commercialisation.
This means that Australian talent has been snapped up overseas.
Five years ago, a workforce survey from the Australian Society for Medical Research found that 61 per cent of respondents (mostly mid-career researchers) considered leaving Australia to further their careers.
This year, the federal government announced a $2.2 billion spend on its University Research Commercialisation Action Plan to attempt to revive the failing market.
Now money is pouring into the sector in a bid to capitalise on (and retain) this talent. And new life sciences precincts are popping up across the country.
A wave of new life sciences precincts
Spencer says there’s now “a lot of investment attracting international attention” and “a range of new projects under development” – including the Aikenhead Centre for Medical Discovery at Melbourne’s St Vincent Hospital, another project designed by Denton Corker Marshall which is currently under construction.
The $100 million Hassell-designed University of Melbourne Life Sciences Precinct (completed in 2019) is a hub for the next generation of vets, scientists and doctors in Victoria.
Monash University’s Denton Corker Marshall-designed Biomedical Learning and Teaching Building (completed 2019), also $100 million, will prepare undergraduate students studying the biomedical sciences.
The combined $658 million Sydney Children’s Hospital and Minderoo Children’s Comprehensive Cancer Centre at Randwick, which HDR are working on, is currently under construction.
It is located within the UNSW Sydney the Randwick hospital precinct, and is part of a record $1.3 billion investment by the NSW Government in paediatric healthcare across the Sydney Children’s Hospitals Network.
Health NSW’s Viral Vector Manufacturing facility, which HDR is also involved with, is currently in the planning stages. The facility will provide essential gene therapies that are increasingly being used in therapeutic and preventative health interventions, including vaccines.
