Science and technology

Outlook for the UK science and technology sectors in 2025

The UK science and tech sectors are poised for significant growth and innovation in 2025, reinforcing the UK’s position as a global innovation leader. With continued investment in research and development, growing start-up ecosystems, and supportive government policies, these sectors present compelling opportunities for investors seeking exposure to high-growth markets.

Drivers of growth

Cluster growth: Life sciences hubs in the “Golden Triangle” of London, Cambridge, and Oxford remain at the forefront, benefiting from proximity to world-renowned universities, talent pools, and venture capital funding. Demand for lab space and R&D continues to exceed supply, pushing up rents and incentivising new developments and conversions. Beyond the Golden Triangle, cities such as Birmingham, Manchester, Glasgow and Liverpool are emerging as viable alternatives for scaling science and technology firms, offering lower costs and growing infrastructure. With preliminary figures of £11bn in funding received by life science companies in 2024, this will likely translate into future expansions and more demand for R&D space across the country.

Technological innovation: Innovations in artificial intelligence, machine learning, and biotechnology are transforming the healthcare pharmaceutical sectors, enabling more precise diagnostics, personalised treatments, and efficient drug development processes.

Government support and funding: The UK government has been proactive in supporting the life sciences sector through various initiatives and funding programs. The UK has secured a £400 million investment to boost clinical trials, marking a significant public-private collaboration. The UK’s latest modern industrial strategy, “Invest 2035,” further bolsters this outlook by providing a credible 10-year plan to deliver the certainty and stability businesses need to invest in high-growth sectors like life sciences. Additionally, the establishment of the UK Research and Innovation (UKRI) framework and the £20 billion pledged to R&D, including access to the Horizon programme, is expected to bolster research and development efforts further. Coupled with private investment, these measures encourage the development of innovation campuses, creating ecosystems that foster collaboration between academia, corporates, and start-ups.

Collaborative ecosystem: The UK boasts a robust ecosystem of universities, research institutions, and biotech companies. This collaborative environment fosters innovation and accelerates the translation of research into commercial applications. The presence of world-class institutions and a skilled workforce continues to attract global investment.

Clean Technology (Clean Tech): Referred to as Climate Technology or the Circular Economy, this sector plays a vital role in the international push for global sustainability. The negative impact of human growth and practices on the planet have long been known to be a significant and unsustainable problem. There are now over 17,000 companies operating in the Clean Tech and clean energy space and with renewed UK government and wider global focus on clean technology, the sector is expected to continue to show significant growth.

Data centres: The rise of AI, cloud computing, and 5G technology is accelerating demand for data centres across the UK. The sector is witnessing significant capital inflows, with investors attracted to its defensive qualities and robust growth outlook. Locations with reliable power grids and connectivity are particularly favoured. The UK data centre market is expected to see significant investment in the upcoming years. Amazon Web Services plans to spend £8 billion on building data centres across the UK, creating around 14,000 jobs. Furthermore, the UK has attracted £6.3 billion in global investment from companies like CyrusOne, ServiceNow, Cloud HQ, and CoreWeave. A prime example of the growing demand for data centres is the recent announcement of a £3.75 billion data centre in Hertfordshire, Europe's largest, designed to support the UK’s expanding digital infrastructure.

Personalised medicine: Advances in genomics and biotechnology are paving the way for personalised medicine, where treatments are tailored to individual patients based on their genetic profiles. This approach promises to improve patient outcomes and reduce healthcare costs, presenting significant opportunities for investment and innovation.

Digital health: The integration of digital technologies in healthcare is another major opportunity. Telemedicine, wearable devices, and health apps are becoming increasingly popular, driven by the need for remote healthcare solutions. These technologies not only enhance patient care but also provide valuable data for research and development.

Sustainable practices: There is a growing emphasis on sustainability within the science and tech sectors. Companies are increasingly adopting green practices, from reducing carbon footprints to developing eco-friendly products. This trend aligns with broader societal goals and offers opportunities for companies to differentiate themselves in the market.

Positive sentiment and performance

Investor sentiment towards the UK science and tech sectors is highly positive. A lack of available space and rental growth have translated into a notable pipeline of science and tech-related space.

Technological innovation, government support, and a collaborative ecosystem are key drivers of growth. Opportunities in personalised medicine, digital health, and low carbon technology are set to shape the future of the sectors. With positive investor sentiment and robust performance, the UK is well-positioned to remain a global leader in science and technology, which is likely to translate in further demand for real estate in 2025.