Warehousing goes up by 85% across key Indian markets
MANUFACTURING, 3PL AND RETAIL sectors drive growth in the warehousing sector that attracts massive institutional funds, states the Knight Frank Warehousing Report 2018 in its third edition.
CT BUREAU K night Frank India launched the third edition of its flagship India Warehousing Market Report 2018. The report unravels the present scenario of the Indian logistics sector along with providing a definitive view on the country’s top warehousing markets which include Mumbai, NCR, Bengaluru, Chennai, Pune, Hyderabad and Ahmedabad.
Balbirsingh Khalsa, National Director – Industrial and Asset Services, Knight Frank India, said, “Post GST there has been a spike in demand by almost 100 per cent as companies who were till now in a wait and watch mode have now got into execution mode.” He further adds, “For the first time we are witnessing consolidation and expansion of warehousing space. This increase in demand from sectors like ecommerce, 3PLs, Consumer Durables, FMCG and Manufacturing to name a few coupled with a requirement for larger sized warehouses has opened up the field for more and more organised players which has led to a demand. We expect the trend to continue and get better in the days to come.”
Dr. Samantak Das, Chief Economist & National Director- Research, Knight Frank India, added, “Traction on industrial corridors and the infrastructure status to the logistics sector, warehousing as a real estate constituent would be a real beneficiary in the times to come. Across the top eight cities in the country, we have seen transaction volumes jump by 85 per cent YoY to 25.7 mn sq ft in 2017. Investors had started taking cognizance of the opportunities in this sector much before the government could implement the reforms. The past few years have witnessed massive participation from institutional investors. Some of them have purchased ready assets, whereas others in a mix of ready and Greenfield assets.”
Key Takeaways:
Leasing transactions in the warehousing sector across key Indian markets burgeoned to 25.7 mn sq. ft in 2017, recording 85 per cent spike YoY The National Capital Region (NCR) attracted the highest footprint in terms of transactions in the warehousing space with leasing of 6.5mn sq.ft in 2017, followed by Mumbai at 5.2 mn sq. ft. Mumbai recorded the largest YoY growth with a staggering 231per cent jump in warehousing space leasing in 2017. NCR followed closely with 129per cent YoY increase From a sectorial perspective manufacturing, 3PL (3rd Party Logistics), and retail accounted for two-third of the share in terms of leasing volumes in the warehousing space in 2017. When assessed separately the share of the manufacturing sector tapered from 30per cent to 21per cent while that of 3PL nearly doubled from 16per cent to 29per cent. Retail more than doubled its share from 9per cent to 16per cent, albeit on a smaller base. Around US $3.4 billion (`22,100 crore) of institutional capital poured in the warehousing sector between 2014-2018.