The demand for logistics and warehousing spaces was largely concentrated in Bengaluru and Delhi-NCR
Leasing activity in the logistics and warehousing segment across India registered a half-yearly growth of 50% during the second half of 2017 to touch 10 million square feet. The demand for logistics and warehousing spaces was largely concentrated in Bengaluru and Delhi-NCR.
These findings are part of the real estate consultancy CBRE South Asia’s latest report – India Industrial and Logistics Market View H2, 2017. As per the report, the increase in demand is a signal of the logistics sector recovering from the short-term disruption by Goods and Services Tax (GST).
“Leasing activity continued to post strong growth in H2 2017, as close to 10 million sq ft was leased across cities. The 50% half-yearly growth in transaction activity was primarily driven by high space take-up by third-party logistics, engineering and manufacturing, FMCG and e-commerce companies,” said the report.
These sectors put together accounted for around 65% of the warehousing space leased out during H2 2017, primarily in and around Bengaluru (46%), Delhi-NCR (23%) and Chennai (13%).
Cities like Kolkata, Ahmedabad, Hyderabad and Pune, collectively accounted for 19% of the demand.
Except Mumbai and Chennai, all other cities witnessed an increase in absorption.
Anshuman Magazine, chairman, India and South East Asia, CBRE, said, “With the government granting infrastructure status, the logistics sector is expected to see increased activity in the near future. The implementation of GST will lead to significant structural changes in operation dynamics, with enhanced focus on supply chain efficiencies. This will further enable consolidation of warehouses and entry of credible, pan-India players, consequently enabling increased FDI inflows.”
With a potential of increase in FDI, more foreign participation in the Indian logistics sector is expected.
“The average size of space take-up increased from around 65,000 sq ft during H1 2017 to about 85,000 sq ft during H2 2017. The number of large-sized transactions of over 200,000 sq ft more than doubled from the first half of the year,” said the CBRE’s report.
Despite an uptick in demand, except southern and eastern corridors of Hyderabad, the rents across all micro-markets in most cities remained stable.
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