Warehouse space leasing grows by 77%

Knight Frank, the independent global property consultancy in association with REED Exhibitions India is participating in theregion’s largest warehousing expo the“9th India Warehousing Show 2019”. As a part of this association, Knight Frank launches the latest edition of its flagship report, India Warehousing Market 2019to give perspective on the scale and growth of the warehousing market in India. According to the report,total warehousing space estimated to be 68 millionsq m (739 millionsqft) in 2019 for the manufacturing sector which is projectedto grow at a compounded annual growth rate (CAGR) of 5%in the next five years to 86 millionsq m (922 million sqft) by 2024. The report notes that logistics cost in India accounts for 13%-14%of the Gross Domestic Product (GDP) which is substantially higher than the (8-10%) logistics cost to GDP ratio in other developed countries.The primary reason for this is the skewed multi-modal mix and the fact that60% of freight movement in India happens via roadways. Mumbai warehousing market clocked in 0.7 million sq m (7 million sqft) absorption in 2018, 34% year-on-year (y-o-y) surge over the previously recorded transactions in 2017. ShishirBaijal, Chairman & Managing Director, Knight Frank India, said, “The growth of the manufacturing sector has been slated to have the most prominent impact on the Indian Warehousing industry.  Just this sector’s storage requirement forecasted to reach 86 million sqm by 2024, instantly puts the spotlight on scope and growth for developers and investors in the warehousing market. The warehousing segment is in the midst of an evolutionary leap spurred by the new GST regime, technological enhancements and the increasing adoption of third party logistics providers. The tangible efficiencies brought in by these logistics experts and the substantial growth in institutional investment activity in the warehousing space have seen leasing transactions in this segment grow by a substantial 77% during 2018. Of which, at 128% growth, the e-commerce segment is the fastest growing occupier segment for the Indian warehousing market.” BalbirsinghKhalsa, National Director, Industrial & Asset Services, Knight Frank India said, “Organisedwarehousing developers are steadily seeing more demand from occupier groups and sectors like E-commerce, 3PLs, Retail, Manufacturing, FMCG,FMCD etc. The string of policy and regulatory reforms unveiled by India in recent times such as implementation of the Goods and Services Tax (GST), the ‘Make in India’ programme and initiatives to set up industrial corridors like Delhi Mumbai Industrial Corridor (DMIC), Delhi-Kolkata Industrial Corridor and logistics parks has accelerated the entry of international institutional players in the Indian warehousing and logistics space. Exponential demand of large sized warehousing structures that are legally compliant in for regional warehousing purpose in top 8 cities has driven leasing volumes to grow from 26.1 mnsqft to 46.2 mnsqft.in last one year. Demand in tier 2 cities is also on the rise and showing big growth potential and combinedly taking demand up to 60 mnsqft across India. This growth is adequately funded by a substantial growth in investments,giving the required stimulus to develop quality and organised warehousing spaces across India.” Akshita Kapoor, Portfolio Director, REED Exhibitions India said “The exponential growth in the Warehousing and Logistics segment is very encouraging,especially the growth in tier 2 and tier 3 citiesacross the country. The current size of the warehousing space in the country which is easily more than 150 million sqft which is set to witness. What is interesting to note is that the sector is growing inclusively encompassing technological advances, service delivery platforms as well as strong real estate strategies. Our show, now in the 9th edition is expected to be the largest not only in India but also in the region.”