When it comes to science, the UK has a lot going for it. Two of its universities – Cambridge and Oxford – are ranked second and third in the world for life sciences, according to the most recent Times Higher Education rankings. They are followed by Imperial College at number 10.

With innovation comes jobs and a need for both lab space and homes. The scale of the opportunity on offer led to an increase in interest in the “Golden Triangle” of Oxford, Cambridge, and London around the pandemic. Investors, including Life Science Reit (LABS), which IPO’d in 2021, were attracted by the strong demand and relatively low supplies of lab space.

Where jobs come, people follow, leading to increased housing needs. Developing is challenging across the country, but Oxford and Cambridge have their own particular infrastructure issues.

In Cambridge, surrounded by the watery Fens, the issue is water. The Environmental Agency (EA) has blocked more than 9,000 homes and 300,000 square feet of lab space due to water scarcity concerns. This makes it hard to build to demand in one of the UK’s hubs.

This highlights how a failure to invest in infrastructure is holding back innovation hubs. “Cambridge is the obvious example of this [failure to invest in infrastructure] where we have a world-leading life sciences industry… but Cambridge has not been provided with the infrastructure, with the water infrastructure, that it needs to be able to grow,” says John Myers, Co-founder of YIMBY Alliance.

Life science investors have highlighted the length of time it takes to obtain planning permission, due to this. Dr Kath Mackay, chief scientific officer at investor Bruntwood SciTech, said: “We have got a site in Cambridge that took time because of the ongoing situation regarding water.” The investor invests in other hubs, such as a £200mn investment in Imperial’s White City Deep Tech Campus.

The same issues with infrastructure can be seen in Oxford, where the Environment Agency objected to Oxpens’ development due to concerns about the capacity of a sewage treatment plant. “There needs to be the infrastructure to facilitate that sort of development,” says Artem Korolev, founder and chief executive of Mission Street, a specialist life science investor.

Of course, difficulties in bringing new supplies to the market will play into the hands of existing owners of lab space in the short term. Life Science Reit reported a 12.1 per cent increase in net rental income over the first half of 2024. In its results, it highlighted that “vacancy remains critically low in Cambridge… but higher in Oxford, where supply has adjusted more rapidly”.