The writer is head of life sciences for Europe at CBRE.

Europe’s life sciences sector is underpinned by technological advancements, innovative drug approvals, and a rich talent pool thanks to it being home to 43 of the world’s top 100 life sciences universities.

However, it’s also marked by competition for funding. This includes Horizon Europe — a €95.5bn EU research and innovation fund — plus foreign direct investment and venture capital (VC) funding. Against this backdrop, national government initiatives can be a differentiator in realising a country’s potential. 

We see this happening in France, where government-led plans for leadership in the sector are generating excitement, notably in Paris. The country has always had strong scientific credentials and research capabilities, but lacked the ability to convert research into products, secure VC funding and retain talent. president Emmanuel Macron wants to change that, and property developers should closely watch the investment opportunities that follow. 

Government vision

In 2021, Mr Macron announced his ambitious €7.5bn Healthcare Innovation Plan, which aims to propel France to the top table of European health innovation by 2030. Some €2bn of this funding is allocated to start-ups, with a further €1bn focused on the development of biocluster, with a particular focus on Paris. The plan also aims to streamline clinical trials and simplify market access for new medicines.

This life sciences focus seems to be hitting the spot among industry leaders. At the 2024 Choose France summit, more than €2bn worth of investment across research and development (R&D) and production was pledged by the likes of Sanofi, AstraZeneca and Pfizer.

Real (estate) opportunities

But how is this growth being supported from a real estate perspective? In truth, not sufficiently. The French capital is the heart of France’s life sciences sector and ambitions, but its property market is undersupplied. CBRE research shows the Paris region has only 2.9 million sq ft of existing purpose-built lab and R&D space.

So, is Paris ripe for significant life sciences real estate development? Real estate does play a role in enabling the expansion of bioclusters, by creating the right spaces and support for their occupiers, plus becoming active stakeholders in developing the ecosystem. 

The first biocluster being developed under France’s Healthcare Innovation Plan is the Paris Saclay Cancer Cluster (PSCC), in the city’s outskirts in Villejuif. The area is home to Gustave Roussy, one of the world’s top cancer hospitals, which has joined forces with leading academic institutions and Sanofi to create the biocluster. The government is providing €100m worth of funding to develop PSCC over ten years, adding to other public and private contributions, including from Sanofi.

Dutch real estate developer Kadans Science Partner, which is funded by AXA Investment Management, has seized the PSCC opportunity and is developing 265,000 sq ft of mixed-use lab space on the site, as well as a further 265,000 sq ft in the established and expanding Paris-Saclay R&D hub nearby. It now has front runner positions in two of France’s key life science clusters. 

More on France:

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• Mipim 2024 | Paris Region's Olympic race for investors

Bright future

Paris has all the key ingredients to excel as a leading centre for health innovation. It has highly regarded healthcare, research and academic institutions, and corporates all working together to accelerate innovation. VC funding flowing into the capital's life science ecosystem has risen to €2.4bn over the past three years, a figure set to increase further as its bioclusters develop. 

For real estate, there are still barriers to leveraging these opportunities. Steijn Ribbens, Kadans’ chief investment officer, warns about high entry barriers facing foreign developers. ”We were looking at Paris for years based on the strength of the underlying science [sector]. But in reality, we only felt we could be successful when we had AXA’s backing,” he told me a short while back. AXA’s connectivity, he said, opened doors for them. 

Nonetheless, the future for Paris’s life science sector is looking bright. Perhaps its biggest differentiator over European peers is the French government’s clear ambition. Most governments have life sciences strategies, but many fall short at an implementation level. This doesn’t appear to be the case with France.      

Aspiring real estate investors should take note. Aligning with these plans gives them the opportunity to identify cluster expansion opportunities that start modestly, but offer significant growth potential.

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