NEW DELHI:
In the latest report by global real estate consultancy Knight Frank,‘India Warehousing Market Report 2020’National Capital Region (NCR) emerges as the foremost market recording the highest volume of leasing at 8.6 million square feet (mnsq ft). It also recorded a 45% CAGR growth in demand over a three year period.
The report also notes that an additional 193 mnsq ft of warehousing space can be built on the existing land committed to warehousing across the top 8 cities of India. This works out to a 63% addition to the existing 307 mnsq ft of warehousing stock in these markets, according to the report.
NCR has a development potential multiple of 1.75, which implies that 75% more warehousing space, can be added to the region. The current stock is reported to be 57mn sq ft with a potential of expansion to 100mn sq ft on warehousing land of 4,178 acres in NCR.
In FY2020, 28% of the warehousing space was leased by e-commerce followed by the manufacturing sector (24%). Major occupiers such as Flipkart and Amazon took up warehouses at the exit points of the Kundli Manesar Palwal Expressway (KMP). The compounded annual growth rate (CAGR) for warehousing transactions for the period FY2017-20 in NCR remained positive with 45%. The warehousing demand in the NCR market has kept vacancy levels low at 13.9% compared to other markets such as Bengaluru and Pune which have vacancy levels of 29.7% and 21.8% respectively.
The report cited nationwide implementation of Goods & Services Tax (GST) in the year 2017 as amongst the most meaningful interventions in the Indian warehousing sector. GST led to a transformative shift to efficiency-based location and size strategy rather than tax saving focused objective. Although, NCR warehousing transaction growth fell given the high base in FY 2020, it witnessed growth a robust 45% CAGR in the FY2017-20 period.
Mudassir Zaidi, Executive Director – North, Knight Frank India said, “The demand for warehousing in NCR saw an upward swing in FY2019 however, due to the on-going pandemic, occupiers and developers have become cautious. Demand from the e-commerce segment is expected to rise, albeit for mid-sized facilities along the NH-48 belt to capitalize on essential services demand from Delhi, Gurgaon, Noida, Greater Noida and other peripheral consumption centers. Also, given the uncertainty in near term need for warehouse space, labour, and transportation consideration, we expect an increased preference for 3PL services.”
The warehousing clusters in NCR are spread along with major industrial hubs on peripheral road networks with easy access to Punjab, Haryana, Uttar Pradesh, and Rajasthan apart from Delhi. Due to the presence of large-scale manufacturing units, industrial warehousing dominates the landscape. The NH-48 / KMP Cluster accounted for 78%, or the highest share of total transactions in FY 2020.
In FY 2020, 28% of thewarehousing space was leased bye-commerce followed by manufacturing sector (24%). With the COVID-19 crisis, the e-commerce sector is set to gain a larger share in consumption due to a shift in buying behaviour, which is likely to accelerate demand for warehousing in forthcoming periods.
