Demand for warehousing space to hit 839 million sq ft by 2020: Knight Frank

NEW DELHI: The total warehousing space demand in India’s top seven markets is expected to touch 839 million sq ft by 2020, from 621 million sq ft at present, on high demand from auto & ancillary and chemical & pharmaceutical sectors, according to a report by property consultancy Knight Frank India. Warehousing requirements of the online retail segment is also set to double, from 14 million sq ft in 2016 to 29 million sq ft in 2020, the report showed.

The warehousing sector has shown a tremendous traction in the last couple of years and is experiencing a significant change in its structure opening up opportunities for real estate players.

Samantak Das, chief economist & national director- research, Knight Frank India says, “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.”

A massive 218 million sq ft needs to be added within the next four years in the top seven markets of India. Factors such as goods and services tax (GST) and the Make in India initiative are expected to push the requirement from the manufacturing sector, according to Knight Frank India.

Instead of state wise warehouses, companies will consolidate into zone wise larger warehouses in the coming years, according to Balbirsingh Khalsa, National Director – Industrial, Knight Frank India. “This will lead to a surge in demand of Grade A and large sized warehouses which will ultimately result in an increase in rentals,” he said.

Investment in warehousing can provide an opportunity of realising returns in the range of 10–24% per annum, according to the report, with Pune offering the best investment opportunity with estimated investment returns to the tune of 22-24% per annum.

Credits ET Realty

Leave a Reply

Your email address will not be published. Required fields are marked *