As warehousing is fast becoming an integral part of integrated logistics network due to technological advancement and the reform-led policy measures, the sector is expected to add around 40 million sq ft space across the top eight cities this year, a recent survey said.
According to the study by global property consultant Savills, warehousing space absorption across eight cities like Mumbai, Pune, Chennai, Bengaluru, Hyderabad, Ahmedabad, Delhi and Kolkata, is expected rise to 35 million sq ft in 2020.
In 2019, the total supply of warehousing space was 37.94 million sq ft while the absorption stood at 33 million sq ft.
“Warehousing industry in India has come a long way and it’s going to continue to mature as a favourable real estate asset class. The sector has witnessed a massive participation from institutional investors and developers amid raising demand from across the sector like e-commerce, retail, FMCG, 3PL (third-party logistics), cold storage, pharma and manufacturing,” Savills India Managing Director, Industrial Warehousing and Logistics Srinivas N said.
As per the study, Mumbai and Delhi are expected to see a significant addition of around 8 million sq ft each in 2020, followed by Bengaluru and Kolkata.
Last year, Mumbai witnessed an addition of 5.7 million sq ft while Delhi added 8.1 million sq ft.
“Delhi NCR, Bengaluru and Mumbai followed by Kolkata will be the front runners in absorbing majority of occupiers since these are sourcing and consumption hubs,” the report said.
As per the study, Pune and Chennai will lead in servicing manufacturing clients’ needs, followed by Delhi-NCR and Ahmedabad.
“Government initiatives like make In India, GST, FDI policy, corporate tax reduction, improved infrastructure of road, port, rail and airports has and will continue to impress the growth,” Srinivas said.
He further said that compliance, quality and improved specifications offerings will be the need of the hour with growing requirements at tier-II locations from organised developers.
Srinivas added that tier-II locations like Guwahati, Coimbatore, Lucknow, Jaipur, Patna, Bhubaneshwar, Ludhiana, Vapi, Nagpur and Vizag / Vijayawada cumulatively will see a total addition in excess of 6 million sq ft of additional absorption.
Last year, manufacturing sector absorbed around 6 million sq ft pan-India, while e-commerce and 3PL leased around 20 million sq ft. SMEs and electronic components manufacturers and auto sector leased significantly in few cities.
“It’s also important to note that there is in excess of 800 million sq ft of Grade ‘C’ and Grade ‘D’ stock across India which will start migrating to Grade ‘A’ and ‘B’ over the next 3 to 5 years,” Srinivas added.