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Warehouse space leasing grows by 77 per cent YoY in 2018
2019-07-10
- Warehousing space requirement for manufacturing sector expected to be 68 million sq m in 2019; estimated to reach 86 million sq m by 2024.
- Mumbai witnessed 34 per cent YoY surge in warehousing leasing volume over 2017.
The total warehousing space is estimated to be 68 million sq m (739 million sq ft) in 2019 for the manufacturing sector, which is projected to grow at a CAGR of 5 per cent in the next five years to 86 million sq m (922 million sq ft) by 2024, as per Knight Frank?s flagship report, India Warehousing Market 2019.
The report notes that logistics cost in India accounts for 13-14 per cent of the GDP, which is substantially higher than the 8-10 per cent logistics cost to GDP ratio in other developed countries. The primary reason for this is the skewed multi-modal mix and the fact that 60 per cent of freight movement in India happens via roadways.
Mumbai warehousing market clocked in 0.7 million sq m (7 million sq ft) absorption in 2018, 34 per cent YoY surge over the previously recorded transactions in 2017.
|
Classification of Mumbai?s warehousing locations
into major clusters |
|
|
Warehousing Cluster |
Major Warehousing Locations |
|
Bhiwandi |
Mankoli,
Kalher, Kasheli, Dapode, Padgha, Vashere, Vadpe, Saape, Lonad, Bhavale,
Sawad Naka, Dohole, Sonale, Anjurphatta |
|
Panvel |
Palaspe,
Uran Road, Taloja, Patalganga |
Key highlights:
- Total requirement of storage space in the Indian manufacturing sector accounts for 80 per cent of the warehousing market today.
- Top warehousing markets in India witness a growth of 77 per cent YoY in leasing in April 2018-March 2019.
- The warehousing industry has witnessed massive participation from institutional investors, as well as developers, who have collectively invested over US$ 6.8 billion since 2014, with an average investment per deal of US$ 282 million.
- Private equity funds had a 49 per cent share of the total investments into the warehousing industry. This was followed by sovereign and pension fund at 31 per cent and 20 per cent of the pie belonged to the developers.
- 83 per cent of the investments in warehousing assets went into new developments whereas 10 per cent went into ready assets and 7 per cent into a combination of ready and under construction assets.
- The investments committed by institutional investors alone, is estimated to create over 15 million sq m (158 million sq ft) of new warehousing space over the next few years.
- Kolkata witnessed highest YoY surge with 191 per cent in warehousing leasing volume over 2017 followed by Bengaluru (147 per cent) and Hyderabad (96 per cent).
- There are three major warehouse clusters in Mumbai-Bhiwandi, Panvel and JNPT. The emerging new Infrastructure and the quick access to JNPT from Chirner road via Navi Mumbai-Belapur will drive in more consumption-based demand in near future.
- Other cities such as Coimbatore, Guwahati, Rajpura, Ludhiana, Nagpur, Lucknow, Visakhapatnam, Bhubaneswar and Siliguri are gaining prominence now in terms of the growing demand for warehousing space.
- Of the 29 states, only seven have a dedicated policy framework for the logistics industry. A comparative analysis of the existing logistics policies of seven states shows that Haryana is rated the highest based on the benefits for developers as well as occupiers.
Sector-wise allocation of Warehousing costs in proportion to net sales:
Source: Knight Frank Research
|
Sector |
Warehousing costs in proportion to net sales |
|
Cement |
2.03 per cent |
|
FMCG |
0.80 per cent |
|
Chemicals |
0.57 per cent |
|
Fertilisers
and agrochemicals |
0.46 per cent |
|
Automobile |
0.43 per cent |
|
Pharmaceuticals |
0.43 per cent |
|
Consumer
durables |
0.38 per cent |
|
Textile |
0.36 per cent |
|
Auto-ancillary |
0.35 per cent |
|
Metals |
0.25 per cent |
|
Engineering |
0.
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