Global Investors betting high on Indian Warehousing sector post GST & Logistics getting infrastructure status

Posted by Daily Shipping Times on 05-03-2018        Tweet

MUMBAI: Global institutional investors’ interest in Indian warehousing market is growing manifold on the back of the Government’s initiatives such as Make in India, implementation of the Goods & Services Tax, and infrastructure status for the logistics sector.

Global and domestic institutional investors have, over the past four years, invested over $3.4 billion into Indian warehousing that has long remained unorganised. These accounted for around 26% of the total private equity (PE) investments into real estate during this period, showed a Knight Frank India study.

Leasing transactions in the warehousing sector across key Indian markets grew to 25.4 million sq ft in 2017, recording 85% year-on-year spike following a 35% jump in 2016.

The rise in both institutional investors’ appetite for warehousing assets and the spike in leasing transactions are attributed to the industry’s rapid shift towards organised format led by the change in operating environment owing to policy decisions.

During the year, the National Capital Region (NCR) attracted the highest footprint in terms of transactions in the warehousing space with leasing of 6.1 million sq ft, followed by Mumbai at 5.2 million sq ft.

Mumbai, with a staggering 231% year-on-year jump in warehousing space leasing in 2017, recorded the largest growth amongst key Indian markets. The NCR was second on the chart with 117% on-year increase, showed the Knight Frank report.

Experts believe that the rise in opportunities for investors would lead to more partnerships warehousing segment going forward.

From a sectorial perspective manufacturing, third-party logistics (3PL), and retail sector accounted for two-third of the share in terms of leasing volumes in the warehousing space in 2017. While 3PL and manufacturing continued to be dominant sectors, retail eclipsed ecommerce as the third major occupier for warehousing in India.

During the year, Kolkata recorded 15% year-on-year growth in leasing volumes for warehousing, while markets such as Bengaluru saw 90%, Ahmedabad 86% and Hyderabad 68% rise.