Logistics, warehouse space in Hyd grows over 50% in H2

Hyderabad: Leasing activity in Hyderabad’s logistics and warehousing segment grew over 50 per cent during second half (H2) of 2017 and this highlights the city’s preference as a logistics hub for both domestic and international companies. Leasing activity was primarily driven by engineering, manufacturing, FMCG and e-commerce segments.

The northern corridor of Hyderabad accounted for 90 per cent of total lease transactions during the review period. Due to an increase in enquiries for quality space, the Eastern and Southern corridors witnessed a rental appreciation in the range of 4–6 per cent.

During the H2 the year, over 3 million sft of new supply entered the market in the form of a large-scale warehouse in the southern corridor. CBRE South Asia, real estate consulting firm, brought out the ‘India Industrial and Logistics Market View: H2 2017.’ Hyderabad leasing and warehousing space is on the rise due to increase in enquiries for quality space, the Eastern and Southern corridor has witnessed rental appreciation up to four to six per cent.

However, it is observed that in the second half of the year, over three million square feet of new supply has entered the market in the form of a large-scale warehouse in the southern corridor.

“The logistics sector in India is expected to see increased activity due to the government granting infrastructure status. The implementation of GST will lead to structural changes in operation dynamics, with enhanced focus on supply chain efficiencies.

This will further enable consolidation of warehouses and entry of credible, pan-India players, consequently enabling increased FDI inflows,” Anshuman Magazine, Chairman, CBRE India, said.

Looking at the larger picture, leasing activity across India in the logistics and warehousing segment has registered a half yearly growth of 50 per cent during H2, 2017 period, which touches ten million square feet and signals towards short-term disruptions, which is caused by GST has abated.

“As India’s warehousing sector moves towards a more systematic mode of operation, coupled with the implementation of GST, we expect to see foreign participation in the Indian logistics market as well as increased inflow of institutional funding and more formal sources of capital,” Jasmine Singh, ED (Advisory & Transaction Services), CBRE India said.

The demand for logistics and warehousing space is largely concentrated in Bangalore with 39 per cent, Delhi-NCR at 20 per cent, and Chennai at 13 per cent. The other two cities to witness sizable demand are Mumbai at nine per cent and other cities such as Kolkata, Ahmedabad, Hyderabad and Pune, collectively has accounted for 19 per cent of the demand.

“Going forward, two factors are expected to drive demand across the country-- consolidation and expansion by existing players, and the entry of new players. With growing demand for better warehouses, we will also see the development of technologically advanced warehouses across the country,” Jasmine added.

On half-yearly basis, all cities have recorded an increase in absorption activity, except Mumbai and Chennai, which saw a marginal drop.