CBRE: Warehouse space leasing up 45% in major cities
A report by CBRE South Asia stated that the transaction activity continued to gain strength in H1 2018 as close to 10 million sqft of space was leased across the seven cities, an increase of about 45 per cent as compared to H1 2017.
As per the CBRE South Asia latest report ‘India Industrial and Logistics Market View, H1 2018’, cities like Bengaluru (25 per cent), DelhiNCR (21 per cent) and Mumbai (20 per cent) are driving the potential demand for logistics and warehousing space, followed by southern markets including Chennai (12 per cent) and Hyderabad (10 per cent). Leasing activity was primarily driven by consolidation and expansion initiatives of firms belonging to sectors such as e-commerce, 3PL, retail, and engineering and manufacturing, which together accounted for more than 75 per cent of the leasing reported during the review period. This was due of policy reforms that the sector had undergone in the past two years (particularly the implementation of the GST), as more and more corporates in this sector consolidate their operations and locate closer to consumption hubs, thereby driving demand for larger warehouses.
Anshuman Magazine, Chairman, India and South East Asia, CBRE, said, “The entry of various private equity firms and foreign players in the Indian logistics market would boost quality supply, hence propelling demand. Cities such as Mumbai, Pune and Chennai would remain major investment destinations, with Delhi-NCR and Bengaluru also being on the investors’ radar.” Commenting on the sector, Jasmine
Singh, Senior Executive Director – Advisory & Transaction Services, India, CBRE said, “We foresee leasing activity to remain upbeat over the next six months driven by 3PL and ecommerce sectors. Initiatives such as the creation of a separate logistics department is a reiteration of the government’s focus on the development of the sector. In addition, initiatives such as ‘Make in India’ and relaxation of FDI norms have further had a positive impact on investment sentiment in the country, leading to heightened business activity across the logistics sector.” On policy measures aiding economic growth, the logistics sector benefitted from the ablation of the short-term pain inflicted by the implementation of the Goods and Services Tax (GST). The implementation of GST has also helped remove inter-state checkpoints and reduce the movement time of cargo, thereby reducing sources of capital, the report said. Adding to this, the grant of infrastructure status to the logistics and warehousing sector has also led to increased investor interest.