REALTY BYTES: ALL TIME HIGH OVERALL SPACE TAKE-UP IN LOGISTICS AND WAREHOUSING; CROSSES 24 MILLION SQ. FT. IN 2018
RECORDS A GROWTH RATE OF MORE THAN 40% OVER 2017: CBRE REPORT, H2 2018
CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest report ‘India Industrial and Logistics Market View, H2 2018’.
The findings of the report interestingly stated that the overall space take-up in the logistics and warehousing sector crossed 24 million SQ. FT. IN 2018 – AN ALL-TIME HIGH. Recording a growth rate of more than 40% compared to 2017, the report said that implementation of GST led to far reaching implications on industries, more so in the warehousing and logistics sector. Overall in 2018, Mumbai, followed by NCR, Bangalore and Chennai dominated leasing, accounting for more than 70% of the space take-up.
The second half of 2018 witnessed robust leasing activity with about 14.3 million sq. ft. of space take up, a 46% increase on a half-yearly basis. Mumbai dominated leasing activity with a share of about 21%, followed by Delhi-NCR (20%) and Chennai (16%), the report, said.
Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE said: “We are very positive about the government’s vision to increase the sector’s contribution to the overall GDP; through more incentives for players and streamlining regulations. With technology permeating the logistics sector, coupled with the government’s push to the sector; corporates will be driven to opt for large, modern warehouses as they would seek to leverage the new GST regime as well as consolidate and expand their operations. This demand we feel, would further be boosted by the entry of various private equity firms and foreign players in the Indian logistics market.”
As per the findings, count of large sized deals (more than 100,000 sq. ft.) almost doubled in 2018 compared to 2017. The implementation of GST coupled with quality supply from reputed developers resulted in average size of deals increasing from 75,000 sq. ft. in 2017 to about 90,000 sq. ft. in 2018. Similarly, the second half of 2018 witnessed about 28% of the leasing in the large sized transactions (more than 100,000 sq. ft.)
Commenting on the sector, Jasmine Singh, Senior Executive Director – Advisory & Transaction Services, India, CBRE said, “We foresee Indian e-commerce companies, 3PL players and online grocery chains to increasingly use innovative tech solutions to improve inventory management. The sector is also likely to observe increased levels of institutional funding and more formal sources of capital as private equity firms and developers are already indicating interest to acquire land parcels across various locations.”
Sectors that contributed to the growth of leasing activity in H2 2018 was majorly led by 3PL service providers with a share of about 40%, followed by engineering and manufacturing (22%), e-commerce (21%). Sectors such as retail, FMCG, electronics also contributed to the overall leasing activity.
The overall demand for logistics and warehousing space was largely concentrated in Mumbai (21%), Delhi-NCR (20%) and Chennai (16%), closely followed by Bangalore (15%). Hyderabad and Kolkata accounted for 14% and 9% respectively; while the cities of Pune and Ahmedabad collectively held a 5% share in overall demand. When compared on a half-yearly basis, almost every city witnessed a growth in leasing activity. While, Chennai witnessed a growth of about 104%, Hyderabad and Kolkata witnessed growth of 93% and 73% respectively. Other cities such as Mumbai (54%), Delhi-NCR (41%) and Pune (17%) also witnessed growth.
The report further stated that rentals continued to appreciate for several micro-markets across cities. The Western corridor in Hyderabad observed the highest rental appreciation at 20% on a half-yearly basis followed by the Western and Northern belts in Chennai; with rental increments of 8 – 11% on half-yearly basis. Meanwhile, other micro-markets such as NH-8 in Delhi-NCR, the Northern Corridor in Hyderabad, and NH-24 in Ghaziabad, reported a rental appreciation of 1-3% on a half-yearly basis. The increase could be attributed to sustained demand and regular enquiries from various occupiers. Rentals in other micro-markets across cities remained stable during the review period
Second half of 2018 witnessed robust leasing activity with about 14.3 million sq. ft. of space take up, a 46% increase on a half-yearly basis.
Mumbai dominated leasing activity with a share of about 21%, followed by Delhi-NCR (20%) and Chennai (16%) & remained the top demand drivers in H2 2018
Count of large sized deals (more than 100,000 sq. ft.) almost doubled in 2018 compared to 2017
3PL led leasing activity in 2018, followed by Engineering & Manufacturing with
