JLLM foresees realty demand from fab

India real estate tracker Jones Lang Lasalle Meghraj (JLLM) foresees large real estate demand in terms of industrial and office requirement from the rising semiconductor manufacturing sector by 2015.

According to JLLM associate director of research Abhishek Kiran Gupta, India is set to emerge as the semiconductor export hub in over five years in the light of the new government policies supporting hardware production and availability of qualified talent pool. The Union government has introduced a special incentive package scheme in 2007.

“The current financial meltdown may delay the process by a year or so. But when the economy gets back into momentum, the semiconductor sector will emerge as the sunrise industry,” Gupta told Business Standard.

Last year, the semiconductor industry in the country recorded revenues worth about Rs 17,000 crore employing 102,000 people. The Indian Semiconductor Association has projected that the sector would generate employment to 1.85 million people by 2010 and 3.58 million by 2015.

In this context, JLLM points out that the Fab City in Hyderabad, which is in the initial stages of development, is projected to generate 5,000 jobs by 2009 and up to 1.4 million jobs by 2016 in 200 ancillary units. Gupta, however, admits that 2009 is going to be a difficult year in the light of global financial crisis.

Nevertheless, JLLM envisages that consumer electronics companies that currently import bulk of their products will set up units in India. Consequently, the demand for real estate space for the semiconductor industry is expected to be around 333 million square feet (sft) by 2010, which is likely to double by 2015.

JLLM says that the Indian semiconductor industry is expected to be driven more by design companies in the medium term. Domestic companies without fabrication units (design units) are expected to enter the sector shortly, though foreign players establishing their units is a long-term prospect.

At present, semiconductor companies operating in India are mainly based out of Bangalore, the National Capital Region, Pune and Hyderabad.