Alternatives Outlook 2024 Report

LIFE SCIENCES

Cushman & Wakefield define ‘life sciences real estate’ as specialised assets where a significant portion of physical area is dedicated to life sciences research and development (R&D), typically classified as laboratories. Throughout 2023 the global life sciences real estate market remained affected by the decline in venture capital (VC) funding activity that begun in 2022 which weakened corporate tenant demand. However, from an occupier perspective, the niche Australian life sciences real estate sector remains largely dominated by government-affiliated research institutes alongside small companies supported by government programs – a significantly different landscape to the large corporate tenant markets of the US and UK. With Australia largely avoiding VC led market turbulence, limited transactional evidence in the life sciences sector continues to demonstrate robust metrics. A key example of this was Charter Hall

Social Infrastructure REIT’s (CQE) acquisition of a 49.9% interest in Westmead Innovation quarter on a capitalisation rate of 4.8%. Going forward, investment opportunities are likely to arise from two key channels. Firstly, development-led opportunities are expected to emerge through corporate growth in Australia’s life science sector. This includes the expansion of domestic companies alongside the entrance of offshore multi-nationals into the Australian market. Secondly, sale-and-leaseback from government-affiliated research institutes and corporates are likely to remain tightly held but an important channel for scale exposure. Cushman & Wakefield does not anticipate that the life science market in Australia will exhibit scalability in the same way as the US and UK markets with prime opportunities highly bespoke to specific operational outcomes. Sector size estimate: AUD 7 billion Prime yields: 5.00%-6.00%

KEY TRANSACTIONS

Size AUD

Type

Name

Yield Buyer/ Investor

Date

Innovation Quarter (49.9%) USyd Medical Foundation

CH Social Infrastructure (CQE)

Direct

66.9m 4.8%

Feb-23

Wentworth Capital

Partnership

500m -

Jul-23

| AUSTRALIA ALTERNATIVES 19

CUSHMAN & WAKEFIELD