IBEF: January 28, 2020
Warehousing sector is expected to add around 40 million sq. ft. space across the top eight cities by this year, as the sector is becoming important part of integrated logistics network on the back of the technological advancement and the reform-led policy measures, according to a recent survey.
According to the study by global property consultant Savills, the warehousing space absorption across eight cities like Mumbai, Pune, Chennai, Bengaluru, Hyderabad, Ahmedabad, Delhi and Kolkata, is expected to increase to 35 million sq. ft. in 2020.
Though, in 2019, the total supply of warehousing space stood at 37.94 million sq. ft. whereas the absorption was at 33 million sq. ft.
"Warehousing industry in India has come a long way and it's going to continue to mature as a favourable real estate asset class. The sector has witnessed a massive participation from institutional investors and developers amid rising demand from across the sector like ecommerce, retail, FMCG, 3PL (third-party logistics) , cold storage, pharma and manufacturing," Mr Srinivas N, Savills India Managing Director, Industrial Warehousing and Logistics said.
Mumbai and Delhi are expected to witness a major addition of around 8 million sq. ft. each in 2020, followed by Bengaluru and Kolkata, as per the study.
In 2019, Mumbai added 5.7 million sq. ft. while Delhi witnessed an addition of 8.1 million sq. ft.
The report added, "Delhi NCR, Bengaluru and Mumbai followed by Kolkata will be the front runners in absorbing majority of occupiers since these are sourcing and consumption hubs".
According to the study, Pune and Chennai will lead in servicing manufacturing clients' needs, followed by Delhi-NCR and Ahmedabad.
Mr Srinivas added, "Government initiatives like make In India, GST, FDI policy, corporate tax reduction, improved infrastructure of road, port, rail and airports has and will continue to impress the growth".
He further said that compliance, quality and improved specifications offerings will be the need of the hour with growing requirements at tier-II locations from organised developers.
Srinivas added that tier-II locations like Guwahati, Coimbatore, Lucknow, Jaipur, Patna, Bhubaneshwar, Ludhiana, Vapi, Nagpur and Vizag / Vijayawada cumulatively will witness a total addition in excess of 6 million sq. ft. of additional absorption.
In 2019, around 6 million sq. ft. was absorbed by manufacturing sector, whereas e-commerce and 3PL utilised around 20 million sq. ft. Sectors such as SMEs and electronic components manufacturers and auto sector rented out considerably in few cities.
"It's also important to note that there is in excess of 800 million sq. ft. of Grade 'C' and Grade 'D' stock across India which will start migrating to Grade 'A' and 'B' over the next 3 to 5 years," Mr Srinivas added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.