The life sciences sector, led by healthcare companies, leased 2.4 million sq. ft. across India and was among the top six sectors that led office leasing activity during 2022, says real estate consulting firm CBRE South Asia Pvt. Ltd.
The total cumulative office space taken up by life sciences firms stood at 8.6 million sq. ft between 2019-22 and is largely concentrated in Bangalore, Delhi-NCR and Hyderabad, the consultancy said in its recently released report, ‘Life Sciences in India: The Sector of Tomorrow’.
According to CBRE, the annual office space lease absorption was 56.4 million sq ft in 2022, making the life sciences sector account for 4% of the total leased out space that year. With a 29% share, the technology sector occupied the biggest chunk, followed by flexible space operators (14%), engineering and manufacturing (13%), banking, financial services and insurance (13%) and research, consulting and analytics (7%).
“Life sciences sector is one of the top alternate real estate choices for investors across the globe – a trend we have recorded over the past few years. In our latest APAC Investor Intentions Survey 2022, healthcare-related properties, including LS assets, were named the most popular alternate segment overtaking Data Centres (DCs) for the first time since the survey began” Anshuman Magazine, chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE India, said.
According to the report, leasing activity in 2022 by LS firms maintained the 2021 leasing momentum, specifically led by the healthcare sub-sector. Leasing activity by medical devices firms peaked in 2020 due to increased demand for safety and diagnostic kits during the outbreak of the pandemic, it said.
The CBRE report indicates that healthcare firms contributed to more than half of the LS sector expansions during 2019-22, followed by pharmaceutical companies with a share of almost one-third of the expansions. “More than three-fourths of the new entrants during 2019-22 were also from the healthcare sub-sector. Healthcare and medical devices were the prominent sub-sectors in Bangalore and Delhi-NCR during 2019-22, while pharmaceutical companies preferred Hyderabad, Chennai and Mumbai for office space take-up,” the report said.
The report also provides a breakup of the country of origin of the life sciences companies that have taken up leased space in India during 2019-22. American LS firms led the leasing activity with a share of about 56% followed by Europe, Middle East & Africa (EMEA) companies (24%), domestic players (19%) and APAC firms (1%). Expansions constituted more than half of the space take-up by American LS corporates during 2019-22, followed by new entrants (30%). Space take-up by EMEA LS firms was also largely led by expansions (83%) followed by new entrants (13%), the report says.
In its outlook, CBRE said the entry and expansion of global and domestic developers will drive the demand for office space in the LS sector for the next three years. Cluster developments such as bulk drug parks, medical device parks, pharma cities etc., with best-in-class R&D facilities are also likely to result in increased leasing activity during this period.
