The Investment Case for Innovation Property Clusters
The Investment Case for Innovation Property Clusters
A shift is underway across the R&D sector. Occupiers are increasingly gravitating towards innovation clusters rather than standalone facilities. These purpose-built ecosystems, characterised by shared infrastructure and co-located tenants, are reshaping how specialist property is developed and leased across Singapore, Australia, and the broader Asia Pacific (APAC) region. This article looks at what is driving that shift, and what it signals for investors assessing exposure to that asset class.
What makes up an innovation cluster
Innovation clusters are geographically concentrated ecosystems where universities, research institutes, technology companies, manufacturers, start-ups, investors, and government agencies co-locate to share infrastructure and access to a common talent pool, encouraging knowledge exchange and collaboration between occupiers. As clusters grow, this shared infrastructure accelerates the path from research to commercialisation, and each additional tenant increases the value of the cluster to those considering it next.
Singapore innovation clusters
For example, Singapore’s Agency for Science, Technology and Research (A*STAR) research institutes sit within close reach of both early-stage biotech companies and multinational R&Ds in the one-north precinct which includes innovation-centric premises such as Solaris. In a similar, albeit more modern, vein, Jurong Innovation District brings research institutes, technology providers, and advanced manufacturers within 620 hectares of each other to support production from prototyping to full scale. Anchor tenants in the district include Hyundai Motor Group and Shimano1.
Meanwhile, Punggol Digital District places cybersecurity, AI, robotics, and fintech firms in direct proximity to academia and student talent in a “space-swap” arrangement with the Singapore Institute of Technology (SIT). With university facilities deliberately intermixed within business park buildings and commercial activities hosted in the SIT campus itself, companies can test their products at adjacent SIT labs while students get exposure to live industry work within their own campus environment.
Australia innovation clusters
A comparable model anchored around research universities has developed in Australia. The Macquarie Park Innovation District in Sydney houses Macquarie University and buildings including 60-66 Waterloo Road, an A-grade asset with over 17,000 sqm of net lettable area (NLA) that is home to prominent health and technology tenants such as Laverty Pathology, Yokogawa and Johnson & Johnson.
Similarly, Sydney’s Tech Central spans six neighbourhoods around the University of Sydney and University of Technology Sydney (UTS), and houses over 150 research institutes2. Melbourne’s Parkville Precinct is home to the University of Melbourne and Monash University’s Faculty of Pharmacy and Pharmaceutical Sciences. Having attracted over $2.8 billion in research and healthcare investment over the past decade, it produces 20% of Australia's patent citations3.
Appeal of innovation clusters to investors
Rental premiums
Due to limited supply, fitted labs and other specialised facilities command higher premiums compared to conventional industrial spaces. In Singapore, suburban business parks — which house a significant share of the country’s lab and R&D facilities — recorded strong rental growth of 1.7% quarter-on-quarter4.
Tenant quality and lease length
Anchor tenants and other specialist occupiers tend to sign longer leases. While well-designed spaces can be repurposed for other specialist occupiers, the “stickiness” of the agreement also gives developers more stable income throughout the lease period relative to other lease types.
Portfolio diversification
The inherent diversification within innovation clusters allows investors to reduce their exposure to economic cycles through a single asset allocation. Many innovation clusters across APAC are also anchored by well-funded, government-backed industries where startup formation and occupier demand are expected to continue growing. In Singapore, initiatives such as the S$37 billion Research, Innovation and Enterprise (RIE) 2030 plan provides greater confidence that innovation ecosystems will continue to expand, supporting demand for specialised properties over time.
How APAC clusters stand out from other regions
A key strength of the APAC region is its diversification. For example, China, together with Japan, India, and Australia, account for 95% of domestic life science R&D spending and 68% of active clinical trials5. Allocation within individual territories also provide in-built diversification that lowers portfolio risk. China itself has dedicated regions serving specific functions along the R&D-to-commercialisation value chain: Beijing for academic research and policy, Shanghai for commercialisation and multinational pharmaceutical activity, and Suzhou for manufacturing and industrial life science6.
Amid the current geopolitical climate, hubs such as Singapore are also rising in appeal due to the strong intellectual property protection, legal transparency, and political neutrality they offer to investors, making them attractive locations for long-term innovation investment7.
The future outlook for innovation property clusters
Emerging sectors are driving a new wave of occupier demand for highly specialised spaces. Each sector has diverse requirements that may require developers to broaden the types of infrastructure they provide. For example, cell and gene therapy institutions may require cleanroom-grade manufacturing spaces while AI-driven drug discovery firms may require infrastructure that supports high compute and power intensity. Semiconductor design tenants, on the other hand, may require capabilities in vibration control and power redundancy. For innovation clusters, this translates into a more diverse property offering, helping to enhance diversification and support long-term lease stability.
Specialised portfolio that conventional properties cannot replicate
Sectoral development, rising demand for innovation, and recent capital shifts into APAC are driving a structural change that will likely solidify innovation cluster models as the region’s dominant configuration for the foreseeable future. Supported by stable government and investment funding, innovation clusters are expected to strengthen income portfolios over the course of the coming decades.
Speak to the Vita Partners team about innovation cluster investment opportunities across APAC.
References
- JTC - Jurong Innovation District.
- NSW Government - Tech Central Innovation Hub.
- Vic Gov - Parkville Precinct.
- Kalynskye Adrian and Cecilia Chow, EdgeProp Singapore - Industrial rents rise for 22nd straight quarter, but momentum eases in 1Q 2026. 23 April 2026.
- Kaiwen Li and Kamya Miglani, JLL - Ecosystem Over Geography: Life Sciences Location Strategy in APAC. 4 June 2026.
- Shaun Brodie, Cushman & Wakefield - Life Sciences Update for Investors – Q1 2026. 26 March 2026.
- Bain & Company - Investors Favor Asia-Pacific Markets as Biotech Destinations Amid US-China Tensions. 31 July 2025.