APG starts a platform for care-related Chinese real estate together with CBC Group, the largest healthcare investor in the Chinese market. Responding to the growing demand for healthcare, among other things due to aging, CBC Healthcare Infrastructure Platform (CBC HIP) invests in care-related real estate, such as hospitals, nursing homes and medical research and production facilities.
The Chinese expenditures on healthcare will most likely double to over 1,700 billion euros by 2026. It is therefore a lucrative growth market, in which real estate plays a significant role, is the opinion of APG and CBC Group. “The care expenditures per capita in China are currently lacking compared to other developed economies,” says Dominic Doran, Director Private Real Estate Asia Pacific. “The expectation is not only for the government to attribute more funding to healthcare, but we also expect the average Chinese to starting devoting more money to care-related matters, as they will be getting greater spending power. That is a long-term trend and, as APG is a long-term investor, investments in care-related real estate are therefore well-aligned with our strategy.”
Attractive
It is also important to mention that the Chinese government has recently equated the rules for research, testing and production of drugs in the same manner as what is internationally accepted. That has made it attractive for investors to start investing in Chinese research on medical applications. Partly because of that reason, the partnership between CBC Group and APG has established the company China Life Science Infrastructure Venture (CLSIV), the first concrete result of the platform. CLSIV managed to raise more than 430 million euros in investments in an initial round. The goal is to ultimately achieve an amount of approximately 1.3 billion euros. “Medical breakthroughs deriving from research in our facilities, could be of global importance which is positive for the returns of CLSIV,” Doran says.
CLSIV is aiming in China at the development of futureproof facilities for the so-called life sciences (biomedical sciences). This sector is currently mainly big in Western regions, where know players such as Pfizer and GlaxoSmithKline have their home base. “It is difficult to name a comparable Chinese company at the moment. But we expect that companies will be established in China within the foreseeable future that will become just as widely known as the major pharmaceutical companies in the west", according to Doran. He also bases his opinion on the fact that the importance of life sciences will increase further. “Due to the aging population, but also because many people will be in need of additional care as a result of an unhealthy lifestyle. And Corona has made everything related to vaccines and medical research even more important.”
Strategic
The Chinese government considers life sciences as a strategically important sector. Beijing is therefore more than happy to make territory available to parties looking to develop biomedical facilities. A lot of territory CLSIV is to purchase, will therefore be bought from the Chinese government. The company has already purchased 1 million squares meters (equivalent to about 140 soccer fields) of terrain in Shanghai. In the future, the country wants to purchase land and develop medical facilities in other Chinese metropolises such as Beijing and Wuhan. The platform CBC HIP may even expand outside China and maybe even outside Asia in the future, even though the latter will be difficult", Doran acknowledges. “A couple of years ago, large American biomedical companies tried to gain footing in Asia, but that appeared to be difficult. I expect it will also be difficult for Asian companies to acquire market share in America and Europe.”
The collaboration between APG and CBC Group is important in order to gain footing in the recently opened Chinese care market. The Asian investor is considered an important player in China and has experience in collaborating with medical scientists and entrepreneurs. “We have established the first investment vehicle, as far as we know, with CLSIV setting foot on the Chinese care-related market,” Doran says. “Parties in need of real estate will therefore certainly be able to find us. And, of course, for the platform it is very positive to be considered a market leader in the field of territory and facilities for biomedical research.”
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