News release

Record levels of capital deployed into UK Life Sciences in 2021

Capital deployed increased by 61% on the previous year

February 07, 2022

Eleanor Parry

Communications Manager, JLL
+44 7719 004580

Record levels of capital were deployed into the UK Life Sciences sector in 2021, solidifying both the sector’s importance and its resilience as an asset class in this period.

Total capital deployed in 2021 increased by 61% to £2.43bn, from £1.47bn in 2020, equating for 11.1% of UK commercial office investments. The weight of capital from investors is higher than ever at £20bn, a 25% increase from 2020. Given only £2.43bn was deployed in 2021, there is a significant amount of capital yet to be deployed.

The US market leads the way globally with £9.11bn ($12.35bn) transacted in 2021, a 17.3% increase from 2020 – although the UK is growing at a faster rate than the US despite volumes being considerably lower.

Venture capital continues to soar

Venture capital, a key driver of Life Science company growth, also rose rapidly throughout 2021 to a total of £5.9bn, according to Pitchbook. Building on a summer spike in investment, the UK saw a 111% increase of venture capital in 2021 from £2.8bn in the previous year.

The UK remains a dominant market in Europe, accounting for 40% of venture capital. Based off the five-year CAGR of 48%, venture capital is projected to grow to £8.7bn in 2022 in the UK.

Occupational growth

The 2022 outlook for occupational growth is stronger than ever, however there is a significant lack of supply, with no purpose-built lab infrastructure and stock in the pipeline to be delivered this year. Access to assets that meets the immediate needs of growth companies and the longer-term needs of established occupiers remains a challenge.

JLL predict that sustained interest in the Golden Triangle Life Sciences cluster of Cambridge, Oxford and London is expected, with a lack of supply alongside anticipated growth in the sector likely to strengthen both rental levels and capitalisation rates compared to traditional office space.

These conditions are likely to encourage growth in regional markets both from a demand and supply perspective, where locating may not only be more economic but there may already be a clustering ecosystem in place, particularly given the increase in start-up numbers in the regions and drive from Government on levelling up.

Chris Walters, Head of UK Life Sciences, JLL, said: “2021 was a record-breaking year for science and the real estate industry who occupy and invest within it, but 2022 is already looking full of promise for more of the same, if not better – with another record year of Venture Capital anticipated. Driven by tech advances and a supportive government agenda to invest in R&D, we can expect to see particularly strong growth in the Golden Triangle, with London as well as established and emerging regional clusters also proving attractive to both investors and occupiers. The knowledge economy remains ever more critical to the UK’s economic growth and with it the real estate that supports it.”

 


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 95,000 as of September 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.