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Life sciences real estate proves pandemic-proof
Stable asset class with sticky leases unimpacted by work-from-home rules
Tom King 23 Jul 2021

While the last 18 months in the Asia-Pacific region have been difficult for commercial real estate investors, especially in the office, retail and hospitality segments, due to the Covid-19 pandemic, one sector that has not experienced any significant issues in the region is that of life sciences real estate.

This has proven providential for Singapore-based Lighthouse Canton, an integrated investment firm for institutional investors and accredited private clients, which only invests in life sciences real estate and has not experienced any significant issues.

“Because life sciences or the pharmaceutical or biotechnology sectors have traditionally been a defensive industry, the industry has done well,” says Shilpi Chowdhary, Lighthouse Canton’s CEO in an interview with The Asset. “And with Covid-19 being a healthcare crisis, everybody, including governments, realize that they need to be investing more in healthcare and life sciences, and we expect that in the post-pandemic world the sector is going to emerge even stronger.”

Unlike in many other industries, Chowdhary points out, life-science, pharmaceutical and biotechnology players have added commercial space to cope with extra demand, in part because of the Covid-19 situation.

A number of cities in Asia-Pacific, Chowdhary adds, possess all the ingredients to become successful life-science hubs because of the availability of qualified talent and favorable government policies, including Singapore. In December 2020, the Singapore government announced it was committing S$25 billion (US$18.3 billion) into its next five-year plan for research, innovation and enterprise, with a sizeable amount expected to be allocated to the life-science and biomedical sectors. 

“In India, you have Bangalore, which is the biotech hub, and Hyderabad is already a very strong cluster,” Chowdhary explains. “Korea has the capability of emerging as a life-science cluster. And, in Australia, we believe that greater Melbourne and Sydney have the potential to grow as strong hubs.”

Lighthouse Canton, which has S$2 billion in assets under management and offices in Singapore, Dubai and India, earlier this month concluded a deal with Ivanhoé Cambridge, the global real estate subsidiary of Canadian fund manager, Caisse de dépôt et placement du Québec, to invest in MN Park, a portfolio of life-science research and development labs and offices in India’s largest biotech cluster in Genome Valley, Hyderabad.

The MN Park portfolio will receive co-investment from Ivanhoé Cambridge and Lighthouse Canton of C$100 million (US$79.4 million), and the parties expect to grow the portfolio, which was acquired in 2016 and is occupied by more than 20 leading global and domestic pharma and bio-tech companies, vaccine manufacturers and contract research organizations.

“This new investment in MN Park allows us to reinforce our conviction in life sciences real estate, a key focus area of our diversification strategy into high-growth, innovation-focused sectors,” notes Chanakya Chakravarti, Ivanhoé Cambridge’s managing director, India.

The latest investment is also in line with Lighthouse Canton’s strategy of focusing on sectors that foster innovation and long-term growth fundamentals.

“The life sciences office labs have been a high-conviction theme for the firm since our acquisition of the MN Park portfolio,” Chowdhary states. “We have specialized in the life sciences research and development segment within commercial real estate, and we happen to be the largest private player in that space in South Asia right now, and are still growing.”

And, while Lighthouse Canton’s home market of Singapore is a flourishing life-science hub, it so far hasn't been able to source investments there. Chowdhary says his firm’s investment strategy will continue to focus on core areas of commercial real estate investment in the life-science, biotechnology and pharmaceutical sectors. 

“In fact, if you look at life sciences, we are talking about sticky leases and a stable asset class, which actually is not getting impacted by work-from-home [regulations],” he states. “Traditional asset classes have been impacted by work from home, but in a laboratory you can't work from home, you’ve got to go to the lab and do your work.”

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