Large pharmaceutical companies are increasingly buying land in Hyderabad as they look to lock-in unused capital in real estate.
According to property brokers, residential and commercial land deals to the tune of Rs4,000-5,000 crore have been noted in Hyderabad.
Companies like Hetero, Aurobindo, Divi’s Lab and Dr Reddy’s have recently purchased acres of land in the city.
Other firms that hold land banks include Morepen Laboratories and Cipla.
“It is good diversification away from investing in the stock market,” said a senior executive at a brokerage firm. “A lot of Hyderabad-based firms prefer investing in land more than any other asset class. They prefer to hold the land for 10-20 years to encash it to get 6x returns.”
The Indian pharma industry has shown a double-digit growth of around 15% in 2021, led by the growth of Covid-19 products in the last one year, as against a single digit growth of 3% shown in 2020, according to Indian pharmaceutical market research company Pharmasofttech AWACS Pvt Ltd.
The land buying spree has led to a sharp rise in land prices too.
“There is a high demand for agricultural land and the prices have gone up by 40-80% in the last two years, while residential plots in the core areas have seen upwards of 50% price appreciation,” said Vineet Surana, founder of MD Property Solutions. “Even the government auction has seen interest from pharmaceutical companies.”
The city has also seen big-ticket lease transactions for setting up research and development units from pharmaceutical companies looking to expand their business operations.
Some global firms which have set up or are looking to expand their R&D units in Hyderabad include Aurobindo, Laurus, Sai Life and Syngene.
“Hyderabad has become synonymous with pharma as Bangalore is with the IT sector,” said Jasmeet Chhabra, managing partner, CerestraAdvisors. “We anticipate a huge demand for pharma real estate and are currently developing 2.5 million sq ft of world-class research infrastructure within Genome Valley to cater to the growing demand.”
Hyderabad has emerged as the largest pharma and life sciences hub in India with its integrated ecosystem from research to manufacturing coupled with a large pool of talent and government-led infrastructure development across Genome Valley for R&D, Pharmacity for manufacturing and Medical Devices Park for ancillaries.
“Hyderabad had seen strong recovery gains in 2020 and maintained its streak in 2021 as well,” said Arpit Mehrotra, managing director for office services (south India) at Colliers. “The city has emerged as the preferred destination for major R&D-focused companies. We have a strong demand pipeline for leased life sciences R&D facilities in Hyderabad.”