Hyderabad warehousing sector sees 4 deals worth $1.2 billion in H1 2022

Hyderabad: Hyderabad warehousing sector has received private equity (PE) of $1,222 million in January-June (H1) 2022, as per a report. The sector has seen 11 deals worth $1,313 million in 2021. Shamshabad, Medchal and Patancheru are the main clusters that are attracting PE investments in the warehouse segment.

The city recorded 128 per cent YoY growth in warehousing transactions of 5.4 million sft in financial year 2021-22. Flipkart, Reliance Retail, ECom Express, DMart and SVS Pharma are among the top occupiers of warehouse space, says international property consultancy Knight Frank India's latest report - India Warehousing Market Report 2022. In FY22, land rates grew marginally in the Patancheru and Medchal clusters, while rentals remained largely steady across locations in the three warehousing clusters. In terms of rental value, Shamshabad cluster ranges from Rs 194-215 per sq metre a month, whereas rentals for Grade A spaces in Medchal cluster cluster ranges from Rs 183-225 per sq metre a month.

The growth was majorly driven by increased growth in third party logistics (3PL) space. With most retail and e-commerce companies preferring to outsource their logistics and warehousing operations to 3PL players in recent years, warehousing demand by 3PL occupiers has grown in the city. The demand for 3PL services increased to 31 per cent in FY22 from 24 per cent in FY21.

With respect to industry-split of transaction volume, 3PL segment remained the biggest demand driver for warehouses. The demand for 3PL services increased from 24% in FY 2021 to 26 per cent in FY22; however the retail sector experienced the highest growth, going from zero in FY21 to 14 per cent in FY 2022.

Shishir Baijal, CMD of Knight Frank India said, "The high growth rate of organised warehousing sector in India is a result of its rising GDP and consumerism. With warehouse leasing in India surpassing the pre-pandemic level, the sector is poised to take a quantum leap to match its more mature peers around the world."

"This will be supported by the ever-increasing institutional interest in owning, developing, and operating warehouse assets ensuring professional expertise to direct the course of this growing market as it matures. Government's push towards development of infrastructure and India's new Logistics Policy will help in the surge," he added.