The requirement of real estate for research & development (R&D) in life sciences sector is estimated at around USD 21 billion over the next decade, according to property consultant Savills India said.
“India is gaining momentum to develop a robust life sciences R&D hub that will likely present a lucrative opportunity for private equity investors,” the consultant said in its report ‘On a Booster Dose: Life Sciences Real Estate’.
The life sciences sector in India is set to grow owing to several favourable factors, it said.
These consist of structural changes including the current geopolitical environment and regulatory regime, India’s rich demographic dividend that translates to a large skilled workforce, cost efficiencies in terms of lower manpower and rental costs, and the growing attractiveness for venture capital funding companies.
“This, in turn, is expected to positively impact the growth of related real estate in India,” the report said.
India has the potential to create a demand for about 96 million sq ft of life sciences research and development real estate from 2021 till 2030. The report works out alternative scenarios for conservative and optimistic cases wherein the potential demand for life sciences real estate ranges from about 72 million square feet to 152 million square feet, respectively.
“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 (Rs 1,200 billion) and USD 34 billion (Rs 2,550 billion) as per conservative and optimistic scenarios. Realistically, the requirement is estimated to be around USD 21 billion (Rs 1,575 billion),” the report said.
Consequently, the life sciences research and development real estate universe holds the potential to attract private equity institutional investment amounting to USD 18 billion over the same period, it added.
“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,” said Diwakar Rana, Managing Director, Capital Markets, Savills India.
He said the life sciences R&D real estate is emerging as a high-potential asset class for institutional investors.