Definition: Life Sciences Real Estate
For the purpose of this article Life Sciences is defined as an industry that is comprised of companies involved in the research, development and manufacture of pharmaceutical, therapies and medical devices, which help to foster medical innovations with the ultimate aim of extending the length and quality of human life. Life Sciences real estate is property specifically designed and built for companies within the industry.
Life Sciences hits reset in a year of global headwinds
2023 was a year of prolonged high inflation, sharp interest-rate hikes and a weak economy, with looming fears of recession. Most countries, however, proved resilient and avoided recession. Now, as most markets can see disinflation and signs of interest rates at their peak, there may be light at the end of the tunnel and a path to improved market conditions in 2024.
Whilst the Life Sciences real estate sector has traditionally remained resilient to challenging economic environments, it is not immune. A year of economic headwinds combined with continued challenges from geopolitical tensions has resulted in a large-scale market correction across all asset classes. Although we think the bulk of the correction occurred by the end of 2023 in the UK, we expect capital values to continue to bottom out in 2024.
Of course, not all markets, geographies or sectors in real estate are equal. The US has always been a bellwether for the UK market, even if the UK market is dwarfed by the USD 774 billion US Life Sciences market. Similarly, to the rest of the global real estate industry, both the US and UK Life Sciences markets have faced a challenging year. Despite the UK traditionally following the trends of the US, we see the two markets in markedly distinct positions going into 2024.
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