‘GST to have a pos­i­tive im­pact on ware­hous­ing’

BUILD­ING BLOCKS Ben­galuru leads the way fol­lowed by Na­tional Cap­i­tal Re­gion and Chen­nai, says lat­est study

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - HT Cor­re­spon­dent n let­ters@hin­dus­tan­times.com

CBRE South Asia Pvt. Ltd, In­dia’s lead­ing real es­tate con­sult­ing firm an­nounced the find­ings of its lat­est In­dia In­dus­trial and Lo­gis­tics Mar­ketView re­port.

Ac­cord­ing to the re­port, the im­ple­men­ta­tion of the Goods and Ser­vices tax across In­dia is hav­ing a pos­i­tive im­pact on the ware­hous­ing seg­ment.

Ap­prox­i­mately 7.3 mil­lion sq. ft. of In­dus­trial and ware­hous­ing space was leased in the first half of , 2017 across key cities in In­dia; a 50% in­crease from the sec­ond half of 2016.

The de­mand for lo­gis­tics and ware­hous­ing space was pri­mar­ily con­cen­trated in Ban­ga­lore (24%), Delhi NC R (21%) and Chen­nai (20%) in­di­cat­ing that the south­ern cities led leas­ing ac­tiv­ity dur­ing the re­view pe­riod. Mum­bai with a share of 13% was the only other city to wit­ness size­able trans­ac­tion ac­tiv­ity.

Ex­cept for Kolkata, and Pune, all other cities recorded an in­crease in ab­sorp­tion of space dur­ing the pe­riod. From a sec­to­rial per­spec­tive, growth in leas­ing ac­tiv­ity was wit­nessed from all sec­tors, ex­cept phar­ma­ceu­ti­cal com­pa­nies, which leased 20% less space when com­pared to the sec­ond half of 2016.

An­shu­man Mag­a­zine, Chair­man, In­dia and South East Asia, CBRE said, “In­dia’s in­dus­trial and ware­hous­ing seg­ment has been wit­ness­ing in­creased ac­tiv­ity over the past few years on the back of our grow­ing econ­omy. The sus­tained growth of the seg­ment, cou­pled with the im­ple­men­ta­tion of the land­mark Goods and Ser­vices Tax, will re­sult in ef­fi­cient sup­ply chains and lower com­pli­ance costs; the ben­e­fits of which will even­tu­ally trickle down to make there­for ma much needed in­cen­tive for busi­nesses in In­dia. It will also help in mak­ing In­dia’s mar­kets more or­ga­nized in the long term.”

In the first six months of 2017, 75% of ware­hous­ing space was leased by Third Party Lo­gis­tics Com­pa­nies (3PL), en­gi­neer­ing and Man­u­fac­tur­ing and Fast Mov­ing Con­sumer Goods (FMCG) com­pa­nies.

The av­er­age size of space take-up in­creased from ap­prox­i­mately 50,000 sq. ft. dur­ing the sec­ond half of 2016 to close to 65,000sq.ft. dur­ing the first half of 2017.

Sus­tained de­mand, cou­pled with lim­ited qual­ity sup­ply led to a steep ap­pre­ci­a­tion in rentals (11-13%) in mi­cro-mar­kets like Ghazi­abad (NH - 24), Kundli / Murthal NH - 1 (Haryana) in Delhi NC R, West­ern Cor­ri­dors of Hy­der­abad and Bhi­wandi in Mum­bai. On the other hand, an in­crease in sup­ply ad­di­tion in Chen nailed to a down­ward pres­sure on rental val­ues, re­sult­ing in a de­cline of about 4-5% in the West­ern Cor­ri­dor and 3-4% in the North­ern Cor­ri­dor, on a half yearly com­par­i­son. CITY HIGH­LIGHTS: NCR Leas­ing ac­tiv­ity al­most dou­bled when com­pared to 2016 due to strong de­mand that was pri­mar­ily driven by 3PL (31%) and FMCG (28%) com­pa­nies.

To­tal de­mand from th­ese two seg­ments in­creased from 22% dur­ing H2 2016 to 67% dur­ing the first half of 2017.Rentals wit­nessed ap­pre­ci­a­tion across key mi­cro-mar­kets dur­ing there view pe­riod Mum­bai Bhi­wandi con­tin­ued to re­main the hub of ware­hous­ing ac­tiv­ity

De­mand was driven by 3PL op­er­a­tors ac­count­ing­for close to 72% of the to­tal space take-up dur­ing there view pe­riod. De­spite sus­tained de­mand lev­els, lim­ited reg­u­la­tory ap­provals and al­ter­nate use of land is re­sult­ing in lim­ited trans­ac­tion ac­tiv­ity across the Trans Thane Creek (TTC) in­dus­trial area. Ben­galuru Leas­ing ac­tiv­ity rises 180% as com­pared to the sec­ond half of 2016. En­gi­neer­ing and man­u­fac­tur­ing ,3 PL, Re­tail, E-com­merce, FM CG and phar­ma­ceu­ti­cal firms drove de­mand dur­ing there view pe­riod. Chen­nai Leas­ing ac­tiv­ity in­creased by about 45% dur­ing the first half of 2017, as com­pared to the sec­ond half of 2016. Ac­tiv­ity was largely driven by en­gi­neer­ing and man­u­fac­tur­ing ,3 PL, FMCG and auto an­cil­lary seg­ment cor­po­rates look­ing at ex­pand­ing their op­er­a­tions in North and West Chen nai mi­cro mar­kets

The city wit­nessed fresh sup­ply ad­di­tion to the tune of 1.7 mil­lion sq. ft ., en­com­pass­ing sev­eral medium to large scale ware­hous­ing de­vel­op­ments. Ma­jor­ity of this sup­ply ad­di­tion was wit- nessed in North Chen­nai (60%), fol­lowed by West Chen­nai and South Chen­nai mi­cro-mar­kets. Hy­der­abad Ma­jor­ity of the leas­ing ac­tiv­ity was con­cen­trated in the North­ern and East­ern zones. De­mand was led by en­gi­neer­ing and man­u­fac­tur­ing, FM CG, phar­ma­ceu­ti­cal san de-com­merce play­ers. Kolkata Leas­ing ac­tiv­ity de­clined marginally dur­ing the first half of 2017, as com­pared to the sec­ond half of 2016. Close to 75% of all trans­ac­tions dur­ing the re­view pe­riod were con­cen­trated across the mi­cro-mar­kets of Dhu­la­garh, Sankrail and Ulu­be­ria along NH -6, Oc­cu­piers from the en­gi­neer­ing and man­u­fac­tur­ing, telecom­mu­ni­ca­tion and 3 PL sec­tors were the ma­jor oc­cu­piers of space. Pune Pune wit­nessed lim­ited de­mand for ware­hous­ing space. Close to 3,00,000 sq. ft. of Grade A ware­hous­ing and in­dus­trial space leased by en­gi­neer­ing and man­u­fac­tur­ing sec­tor com­pa­nies and 3 PL op­er­a­tors. In­vest­ment ac­tiv­ity by High Net-worth In­di­vid­u­als and do­mes­tic com­pa­nies for in­dus­tri­ally zoned land parcels also wit­nessed a pos­i­tive growth, across lo­ca­tions such as Ch a kan, Sanaswadi and Hin­je­w­adi Ahmed­abad De­mand picked up in the city with ap­prox­i­mately 4,25,000 sq. ft. of space leased across lo­ca­tions such as Chang­o­dar and As­lali.

In terms of sup­ply, close to 1.5 mil­lion sq. ft. of Grade A sup­ply has been launched, as apart of the three de­vel­op­ments at Kheda, Naviyani and Vithalpur

As we move into the sec­ond half of the year we ex­pect strong leas­ing mo­men­tum to con­tinue across the key cities. Go­ing for­ward, de­mand for ware­hous­ing space will be driven by en­gi­neer­ing and man­u­fac­tur­ing com­pa­nies, re­tail play­ers and3PLoper- at ors. The G ST, which came into ef­fect on July 1, 2017, is ex­pected to be a game-changer for the ware­hous­ing mar­ket.

With its im­ple­men­ta­tion, we ex­pect thereto be con­sol­i­da­tion of large ware­hous­ing firms, en­try of re­puted de­vel­op­ers backed by in­sti­tu­tional fund­ing and rise in de­mand for large mother ware­houses. This will re­sult in the emer­gence of large scale na­tion­wide play­ers. With new tech­nolo­gies com­ing in, the con­cept of ‘hub and spoke model’ is likely to gain promi­nence, driven by op­er­a­tional ef­fi­ciency and cost re­duc­tion. This growth in de­mand will spur sup­ply of qual­ity ware­hous­ing in the fu­ture.

GETTY IM­AGES From a sec­to­rial per­spec­tive, growth in leas­ing ac­tiv­ity was wit­nessed from all sec­tors, ex­cept phar­ma­ceu­ti­cal com­pa­nies, which leased 20% less space when com­pared to the sec­ond half of 2016.

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