Mumbai is now the 26th most expensive industrial location according to ‘Industrial Spaces Across the World 2008’, a Cushman & Wakefield report. This means the city has become the biggest riser in ranks, making a quantum leap of eleven places. It also recorded the highest percentage growth in rental values in one year, at 94 per cent over a single year. New Delhi (IMT Manesar) accounted for the 6th highest percentage growth in rental values in a single year with a growth of approximately 30 per cent. Mumbai commanded a rental value of US$10.88/square foot/year (approximately INR 428.78/square foot/year) in December 2007, as against US$5.6/square foot/year (INR 221.02/square foot/year) in January 2007.
Sanjay Dutt, joint managing director of Cushman & Wakefield India, says: “High levels of owner occupancy in Mumbai have led to a shortage of product at a time when demand is being stimulated by India’s strong economic growth. This in turn has increased rents. With a shortage of space in the city, many occupiers are locating in industrial parks in the outskirts, in particular as the infrastructure improves and with the introduction of state incentives. In Chennai, locations such as Sriperumbadure, and in NCR, Manesar and Greater Noida have seen a similar shift towards developments in peripheral locations.”
NCR’s IMT Manesar witnessed heightened industrial activities especially after most traditional locations in Delhi are giving way to the development of office spaces for IT/ITeS, software development/BPO services and other services industries. Sanjay Dutt added, “The growth of IMT Manesar has been fuelled by the attractiveness of the region on account of better infrastructure and proximity to NCR. Apart from being an alternative to erstwhile industries within Delhi, it is also being viewed favourably by alternate industries like the services industries. Auxiliary development of residential properties in and around Manesar has made it more attractive.”
Thane – Turbe Creek has seen the maximum increase in rental values in a single year, at 94 per cent. In Pune areas including Chakan, Talegaon, and Hinjewadi have witnessed an average rise of 20 per cent, with the exception of Ranjangaon, where the rental values accelerated at the rate of 50 per cent over a single year.
These areas have experienced heightened economic activities due to a combination of favourable government policies towards development and the resultant corporate interest as viable options for growth within India. These locations are being preferred due to superior development and relatively affordable rental values (when compared to office rentals in a city), escalating the values in these industrial locations significantly.
In Bengaluru, locations like Bommasandra, Peenya and Jigani industrial areas witnessed an average growth of 12 per cent over last year, while Hyderabad saw an average increase of 20-25 per cent in rental values in the same period. These areas are established industrial estates formed by the government. However, owing to the non-availability of government-promoted industrial estates, these areas have witnessed increased demand from the services industry and the residential sector as well – which has been reflected in the price movement herein. Further, with the city limits expanding, coupled with improvements in connectivity and social infrastructure development, these areas are no longer considered ‘out of the city’.
The area around London’s Heathrow airport retains its position as the world’s most expensive industrial location in this year’s edition of ‘Industrial Spaces Across the World’, with a monthly rental value of US$28.91/square foot/month. Kevin Storey, head of Industrial Space for Cushman & Wakefield in the United Kingdom, comments: “The effect of the opening of Heathrow airport’s new Terminal 5 in March 2008 has been relatively muted so far, although it does add to the continuing pressure on supply in the airport area. There is an availability of smaller, second-hand units in the general area, but large sites or units are few. The shortage of land has already seen the construction of two-storey buildings at X2 in Hatton Cross.”
‘Industrial Spaces Across the World 2008’ looks at prime industrial space for manufacturing and logistics/warehousing in 138 of the world’s top industrial locations. The main global ranking is compiled by taking the most expensive location in euro/US$ terms in each of the 52 countries monitored.
In this year’s survey, 89 per cent of locations showed rising or stable occupancy costs for industrial space in 2007, with only 11 per cent showing a fall. Globally, rents increased by an average of just over 6 per cent in 2007, with South America showing the strongest growth on a regional basis, with 25 per cent.