$10.5 trn global food market driving demand for real estate

The global food market is set to reach $10.5 trillion in 2024 and grow at an annual growth rate of 5%, according to new research by Savills, while venture capital trends point to the need for more real estate.

“Globally, there’s a recognition of the importance and the responsibility of enhancing and ensuring the sustainability of the food ecosystem,” said Steve Lang, director, Savills Research. “This is reflected in significant investments being made across all continents, which supports the system in which the VC-invested companies will be located.”

Aggregate global venture capital funding to food-related companies has increased approximately 1.5 times from $95 billion to $226 billion in the past five years compared to the preceding period, says Savills, and this is driving an uptick in demand for real estate to service the industry.

Significant VC investment into the food category is segmented into five key sectors; agriculture, food and beverage, containers and packaging, agtech and foodtech, but Savills says that it is the growth of the ‘tech’ components that is likely to create most new companies and generate the largest new real estate requirements in the near future.

“The growth in agtech and foodtech is breeding a brand new group of occupiers that will need new office, lab and warehouse spaces around the world,” said Lang. “While some food parks and specialist real estate ecosystems already exist or are planned, based on the VC investment trends, we see the need for more emerging in the near future.”

With over 878 million acres of farmland area, the United States accounts for over half of global VC investment into agtech and foodtech. However, Savills notes that as well as subsidising domestic production to support food security, the US Department of Agriculture has announced a $466.5 million investment plan to strengthen the world’s food security, illustrating how critical foreign direct investment is within the market.  ​

China, with approximately 20% of the world’s population yet only 10% of global arable land and 6% of water resources, is investing heavily in food as a key policy area, and is recorded as the highest provider of agricultural FDI from 2018 to 2022.

Europe has many examples of food research and investment, and several pre-existing real estate schemes targeted at the industry, for example The Netherlands’ Food Valley, focused on food R&D, and Agro Food Park in Denmark, which is home to over 85 companies employing over 1,300 people, with a Berlin Food Campus also proposed in Germany.

“The amount of money targeted at the food sector is projected to continue as venture capitalists recognise the quality of investable companies and the critical problems that they are looking to solve, including human and planetary health,” said Tara Patel, strategic advisory, Savills. “VC investors are looking for opportunities to invest in companies, from start-up to scale-ups, that are capable of addressing the challenges and reducing complexities for producers, consumers and the supply chain players in between.”