BIOTECHNOLOGY A NEW OPPORTUNITY FOR REAL ESTATE?

Hong Kong is a Service Oriented Economy: service-related economic activities represent an estimated 93.6% of the Gross Domestic Product in 2021. However, Real Estate, Professional and Business Services which represent 9.1% of the Gross Domestic Product in 2021, have been steadily declining from 10.8% since 2017. As Technology and Innovation play a more prominent role in Hong Kong’s economy, an interesting question for investors is how to identify new niche opportunities and where to play.
Hong Kong offers an attractive geographic location, as a gateway and connector to the Greater Bay Area. This provides a more extensive ecosystem in which companies can grow and attract financing. The Hong Kong government has played a key role in promoting the development of Biotechnology in Hong Kong and has identified Biotechnology as one of the four key areas where it would encourage Innovation and Technology. There is an estimated 250+ biotechnology‑related companies in Hong Kong, covering Life Sciences, Traditional Chinese Medicine, Medical Devices or Diagnostics. These companies engage in a wide range of activities, including product Research and Development, Manufacturing, Marketing and Sales.
Although the supply and demand are not fully comparable to other global markets, lab space rents have been catching-up with prime office rents in key major locations like London or San Francisco Bay Area.

Innovation and Technology plays a prominent role in Hong Kong’s economy. The development of a Biotechnology ecosystem and related value chain, brings new perspectives for Real Estate Developers, Asset Managers and Private Equity investors especially in terms of niche opportunities and where to play in industrial and commercial real estate. 
 

Source: IPSOS Startegy3 Analysis, the Government Economist Financial Secretary’s Office of Hong Kong, Savills, Statista