Biotechnology to drive office space market

Yet again, another growing sector in the country will push the demand for commercial real estate northwards. This time, it is the biotechnology industry, which is expected to contribute approximately 140 million square feet to the office demand within India by 2010 as per a recent study by Cushman & Wakefield. Even though the country currently holds a minimal market share of 2 per cent of the global biotechnology market, it has immense potential to develop as one of the major players by 2010 and is expected to generate US$ 5 billion in revenue, creating employment for one million people by 2010 through its products as well as services.

Bangalore, Hyderabad, Chennai, Pune and Mumbai are being seen as emerging destinations for the setting up of biotech facilities and scored considerably high on the parameters with each city having distinct fundamentals/ factors driving the growth.

The study conducted by Cushman & Wakefield across 40 cities in India to evaluate the top 15 locations which have or would witness growth in the biotechnology sector was based on various parameters related to three crucial factors that affect the industry viz. investment environment, social and physical infrastructure as well as polices and framework. These cities hold a proven potential and have sustained the confidence of corporate entities operating under the sector. They offer better infrastructural facilities and a talent pool, the two most important factors in setting up a biotech facility.

Sanjay Dutt and Anurag Mathur, Joint Managing Directors, Cushman & Wakefield India said, “The biotech story is still in its infancy in India, but it appears poised to witness a successful replication of the IT/ITeS precedent. The location preference is also following a similar trend as in IT with most of the biotechnology activities currently concentrated in southern India; however, a strong momentum towards western and northern India is anticipated.”

In addition to these emerging cities, there are a number of locations that have the potential to grow in this sector like Indore, Banasthali, Alwar, Sotanala, Shimla, Bhopal and Silliguri. Although some of these cities have not witnessed much development in the past, there have been proposed physical infrastructure initiatives in the form of biotech parks and SEZs as well as policies that have been proposed or implemented to improve the location advantage.

The biotechnology sector in India has grown exponentially over the last few years with the market size reaching INR 85 billion (US$ 2.08 billion) in 2006-07 and revenues registering a growth of 31 per cent over last year. To cater to this burgeoning demand from the biotech sector (that is expected to be an integral part of the next boom in India), there have been a considerable amount of investments and infrastructural developments during the last few years.

At present there are six operational biotech parks in India and another 27 are proposed across the country. The highest number of planned biotech parks is in Gujarat followed by Tamil Nadu, Andhra Pradesh, Rajasthan and Karnataka. In addition, there are 24 approved biotech and allied SEZs being planned that will spread across the country covering a total area of approximately 1,043 acres. Maharashtra has the highest number of SEZs approved followed by Karnataka.