Come 2012 and India may well see around 110 logistics parks spread over approximately 3,500 acres being developed at an estimated cost of one billion dollars.
According to a Cushman & Wakefield (C&W) report, ‘Logistics Industry – Real Estate’s New Powerhouse’, around 45 million square feet of warehousing space is expected to be developed by various logistics companies by 2012.
With most of these developments concentrated in 14 locations, C&W conducted a study to identify the top cities, which have or will witness growth in the logistics sector based on various parameters that included existing logistical infrastructure, existing and proposed manufacturing clusters, consumer markets, state and union government initiatives and geographical location.
According to the study, the Indian logistics industry is expected to grow annually at the rate of 15 to 20 per cent, reaching revenues of approximately US$ 385 billion by 2015. As per C&W estimates, the market share of organised logistics players is also expected to double to approximately 12 per cent in the same period.
Sanjay Dutt, joint managing director, Cushman & Wakefield India said, “Since almost a third of the total realty development in the sector is expected to take place in emerging locations, many tier II and tier III cities and peripheral locations that offer good connectivity to multiple markets will witness increased activity from logistics players, providing a thrust to the real estate market.”
According to the report, Mumbai has emerged as the preferred location for the development of logistics parks. With an investment of approximately 200 million dollars, development of around seven to eight logistics parks on approximately 600 acres of land in Mumbai is already planned. The other cities that fall within the established locations include Kolkata, Chennai and Hyderabad. These locations are characterised by excellent port, rail and road connectivity and are witnessing significant investment in infrastructure. High concentration of organised retail, established manufacturing hubs and proposed SEZ developments further augment the appeal of these locations.
The report further says that the demand for warehouses and logistics services are expected to accelerate further due to the increase in foreign trade and the upcoming Maha Mumbai Special Economic Zone. Meanwhile, warehouse rentals are also expected to increase by 15 to 20 per cent over the next two years.
The report further points out that Nagpur, Vizag and Gurgaon are currently lagging behind in support infrastructure but are promising logistical hubs due to high ratings on other parameters including geographic location, existing and proposed manufacturing clusters and SEZs. There are many infrastructural developments taking place in these locations which will increase the attractiveness of these over the next five years.
The report also mentions that alternate locations including Bengaluru, Indore, Alwar, Jamshedpur, Ahmedabad and Ambala are going to be developed as potential logistics hubs in the near future as they are emerging as major manufacturing hubs.