The Indian warehousing market, in 2019, saw an increase of warehousing demand for both Grade A and Grade B spaces by at least 25% and touched 211 million sqft, suggested a report published by property consultancy JLL. According to the report, an increased share of Grade A stock will help the market touch 337 million sqft by 2022.
In 2019, Delhi NCR region followed by Mumbai and Bengaluru remained the top three cities with warehouse space absorption of 47.7 mn sqft, 38.5 mn sqft and 28.9 mn sqft respectively.
Apart from this, other cities such as Kolkata, Chennai and Pune also continued their strong show. The top eight cities namely Delhi NCR, Mumbai, Pune, Bengaluru, Chennai, Kolkata, Hyderabad and Ahmedabad witnessed a 15% year-on year growth in the total net absorption in Grade A and Grade B warehousing space, revealed the report.
As occupiers make the transition to spaces with global level specifications, 80% of demand of building warehouses comes from sectors like 3PL, e-commerce and engineering, while the rest 20% is covered by retail, Auto & Ancillaries and other.
This is further enabled by liquidity infusion from global investors. In the longer run, increased capital will ensure that more quality space is being built to fulfil the demand for warehouses not only in Tier-I but going forward in Tier-II cities.
“Given that transportation contributes to a significant operation cost of logistics, if the infrastructure challenges are addressed, India’s logistics and warehousing sector will see significant growth, and foreign capital will remain an integral part of this.”~Yogesh Shevade, Head of industrial services at JLL India
Companies such as Hiranandani Group and Embassy are already investing in this segment, while global funds like Blackstone, ESR and Morgan Stanley invested in a combination of platform or project level deals last year.
The report also talked about the major policies introduced by the centre namely, National Logistics Policy, Multimodal Logistics Park Policy, and Corporate Tax Rate, which will bring India at par with the other developing economies in the world.