Warehousing space requirement to grow by 2020: Knight Frank

Knight Frank India has launched the second edition of its flagship India Warehousing Market Report 2016. The report unravels the present scenario of the Indian logistics sector along with providing a definitive view on the country’s top seven warehousing markets which includes Mumbai, NCR, Bengaluru, Chennai, Pune, Hyderabad and Ahmedabad.

The total warehousing space requirement in the country’s top seven markets is expected to grow from 621 mn sq ft in 2016 to 839 mn sq ft by 2020.

Pune offers the best investment opportunity in India today with estimated investment returns to the tune of 22-24 per cent per annum. Warehousing requirements of the e-tail segment to double from 14 mn sq ft in 2016 to 29 mn sq ft in 2020. Auto and ancillary and chemical and pharmaceutical sectors emerge as largest demand drivers of warehousing space. About 17 mn sq ft of space transacted annually in the top warehousing markets of the country as of today. GST and Make in India set to give a thrust from the manufacturing sector for warehouse spaces.

Along with unveiling the numerous facets of the Indian warehousing industry, this report also provides actionable assistance on investment opportunities available in the current scenario for readers.

Speaking about the report, Balbirsingh Khalsa, National Director – Industrial, Knight Frank India, said “The demand for warehousing is on the rise in the Manufacturing and Consumption sectors with the manufacturing sector dominating the overall space demand. Because of GST, there will be consolidation in the warehousing industry. Instead of state wise warehouses, companies will consolidate into zone wise larger warehouses. This will lead to a surge in demand of Grade ‘A’ and large sized warehouses which will ultimately result in an increase in rentals. The ambitious Delhi – Mumbai Industrial Corridor (DMIC), and freight corridors, such as the Western and Eastern Dedicated Freight Corridors, are gaining renewed focus thereby adding a further fillip to the warehousing sector.

Overall we expect good growth in Warehousing & Logistics till 2020.”

Dr. Samantak Das, Chief Economist & National Director – Research, Knight Frank India added, “With the total warehousing space requirement in the country’s top 7 markets expected to grow from 621 mn sq ft in 2016 to 839 mn sq ft by 2020, the warehousing sector has shown a tremendous traction in the last couple of years. Further, investment in warehousing can provide an opportunity of realising returns in the range of 10-24 per cent per annum. The renewed focus on infrastructure development and the manufacturing sector offers opportunities across the logistics value chain which has attracted the interest of international financial and development institutions and global institutional investors and developers. The improving regulatory environment for the Indian Real Estate Investment Trust (REIT), which also covers the warehousing segment, has added to this inclination. We believe that the warehousing sector is going to experience a sea change in its structure and will open up opportunities for real estate players in the coming years.”

Knight Frank LLP is one of the leading independent global property consultancies. Headquartered in London, Knight Frank has more than 13,000 people operating from over 400 offices across 58 countries. These figures include Newmark Grubb Knight Frank in the Americas, and Douglas Elliman Fine Homes in the USA. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. In India, Knight Frank is headquartered in Mumbai and has more than 1,000 experts across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions (residential, commercial, retail, hospitality, land & capitals), facilities management and project management.