NE BUSINESS BUREAU
MUMBAI, JULY 2
Warehousing demand fell 11 per cent during the last fiscal year at 41.3 million sq ft across eight major cities, including Ahmedabad, due to economic slowdown, according to property consultant Knight Frank.
The demand for warehousing, which also includes industrial space for light manufacturing, stood at 46.4 million sq ft in 2018-19 fiscal across 8 cities – National Capital Region, Mumbai, Ahmedabad, Pune, Bengaluru, Kolkata, Chennai and Hyderabad, the consultant said in its latest report ”India Warehousing Market Report – 2020”.
Despite fall in demand, the rentals increased by 4-7 percent in Grade-A warehousing projects across these eight cities.
Post-GST, the asset class has received institutional investment commitments of US $6.5 billion.
Knight Frank India has pegged the existing warehousing stock across eight cities at 307 million sq ft.
The existing land committed to warehousing across the top eight cities of India has the potential to add 193 million square feet of new warehousing supply, it added.
According to the data, warehousing demand fell 32 percent in the national capital region (NCR) to 8.6 million sq ft last fiscal.
Mumbai saw 8 percent growth in demand at 7.5 million sq ft, while Ahmedabad witnessed a 5 percent rise in demand at 5.1 million sq ft.
Warehousing demand in Pune went up 42 percent to 4.9 million sq ft but declined in Bengaluru 23 percent to 4.3 million sq ft.
Kolkata witnessed 14 percent fall to 3.9 million sq ft, while Chennai saw a 19 percent decline to 3.4 million sq ft.
The demand in Hyderabad dipped 14 percent to 3.4 million sq ft.
“The demand for warehousing has moderated last fiscal due to economic slowdown,” Knight Frank India CMD Shishir Baijal told reporters.
He said the demand is expected to fall during the current fiscal year due to the COVID-19 pandemic.
Shishir Baijal said, “Despite the economic slowdown and the pandemic, the warehousing market has remained resilient, recording 44 per cent CAGR in the last three years. Demand has especially been strong from industries, like 3PL, e-commerce, FMCG and pharmaceutical, which is expected to continue in FY21.”
“Despite the economic slowdown and the pandemic, demand has especially been strong from industries such as 3PL (third-party logistics), e-commerce, FMCG and Pharmaceutical, which is expected to continue in fiscal 2021,” Baijal said.
Out of the total demand, third party logistics firms contributed 36 percent, while e-commerce and manufacturing companies accounted for 23 percent each.
The warehousing segment has been gaining traction with investors in the last few years due to the potential of India’s domestic consumption and overall GDP growth, he added.
According to the report, the warehousing demand in the secondary market, which includes 11 tier II and III cities, increased to 6.4 million sq ft from 5.3 million sq ft.
These 11 cities are Ambala-Rajpura, Guwahati, Patna, Coimbatore, Bhubaneshwar, Lucknow, Ludhiana, Jaipur, Indore, Siliguri, and Vadodara.
