Warehouse leasing activity in India grew more than 45% year-on-year to 25 million sq ft during 2018, helped by the expansion in the logistics sector, and particularly by the growth of online retail, reports The Financial Express.
E-commerce alone accounts for 23% share of this growth with the average size of warehouse leasing by e-commerce retailers and their logistics partners growing by a factor of 2.3 in a year, averaging at around 170,000 sq ft in 2018, real estate consultancy CBRE said in a report.
The impressive growth in e-commerce in the country has been on the back of favourable policy reforms, tech-enhanced warehouses, rising smartphone and internet penetration, and the digital India movement.
The report added that the demand for better quality space resulted in rents rising by around 10-25% y-o-y in 2018.
“The sector has seen unprecedented growth and we expect supply to touch almost 60 million sq ft by 2020 end,” said CBRE chairman and CEO (India, South East Asia, Middle East and Africa) Anshuman Magazine. “Innovative technologies, coupled with viable government reforms such as GST and other global collaborations will further push the envelope of development for the Indian logistics sector and given the dynamics at play, demand and supply are both poised to burgeon in the coming years.”
While supply is on the upswing, quality is also expected to improve as large-scale tech-backed logistics facilities are coming up around the country, at par with established global standards.
While the overall warehousing supply (Grade A and inferior grade) for the sector is expected to be around 60 million sq ft till 2020-end, at least 22 million sq ft of this supply is estimated to be in the Grade A category, he added.
CBRE’s national head (industrial & logistics) Jasmine Singh too expressed a positive sentiment on the growth in the logistics sector.
“We anticipate warehouse leasing activity to remain vibrant going forward, driven by continued demand from e-tailers, policy impetus and growing demand from Tier II cities. Modern tech-powered warehouses will rule the roost, pushing inferior grade properties down the demand pyramid. Serious players with a long-term view would also eventually consider green logistics networks,” he said.