Hyderabad sees upswing in warehousing

Hyderabad: The warehousing market in Hyderabad has witnessed 3.4 million (34 lakh) square feet leasing activity in FY20, according to a report released by property consultancy Knight Frank India. In its latest report titled India Warehousing Market Report-2020, Knight Frank India said Hyderabad showed the highest warehousing development potential (2.19) amongst the top eight cities in India. The city has the potential to more than double its existing stock from 13 mn sq ft to 29 mn sq ft. This comes on the back of a land pool of nearly 1,291 acres committed to warehousing, the report said.

According to it, Goods & Services Tax (GST) has led to a transformative shift to efficiency-based location and size strategy rather than the erstwhile tax saving focused objective. The warehousing asset class in the city has seen a robust compounded annual growth rate (CAGR) of 41 per cent in the last three financial years.

The major drivers of the warehousing sector in Hyderabad are e-commerce, retail and the Fast Moving Consumer Goods (FMCG) / Fast Moving Consumer Durables (FMCD) industries, which together contributed to 50 per cent of the total transacted space in FY2020. Warehousing activity in Hyderabad is largely concentrated in three major clusters of Medchal, Patancheru and Shamshabad. Of the three, a significant 87 per cent of the FY20 transaction activity was concentrated in the Medchal cluster. Rent appreciations have been reported across locations in the three warehousing clusters. "The Hyderabad's warehousing market is a consumption centre driven by ecommerce, retail and FMCG. With large ecommerce and FMCG players preferring to outsource their logistics and warehousing needs, the share of third-party logistics in the transactions pie has gone up to 31 per cent in FY20," said Samson Arthur, Branch Director-Hyderabad, Knight Frank India. While warehousing market demand has been affected in FY20 due to the economic slowdown and disruption caused by the pandemic, the market's underlying strength is evident in the 41 per cent annual growth it has commanded over the past three years.