Mumbai: With nearly USD 1.1 billion of private equity pumped during the last two years, the Indian logistics and warehousing sector is expected to grow to USD 215 billion by 2020, experts said.
According to recent report released by property consultant Knight Frank, total warehousing space is estimated grow at a CAGR of five per cent in the next five years to 922 million sqft by 2024.
Another survey released by JLL, which projected the industry to grow at USD 215 billion by 2020 stated structural reforms including the awarding of infrastructure status and the implementation of GST, have bolstered the demand for logistics and warehousing space in the country.
Property consultant Anarock noted that e-commerce activity has caused a corresponding rise in demand logistics and warehousing, in both tier I and II markets, with the southern cities of Bengaluru, Chennai and Hyderabad witnessing maximum interest by investors, followed by Mumbai and Pune.
“With January-March period of 2019 already witnessing 8.4 million sqft of property absorption, it is expected to clock around 38 million sqft by end of 2019,” JLL said.
The logistics sector had a massive jump-start in the first quarter of 2019 when private equity players pumped in nearly USD 200 million with LOGOS India investing nearly USD 100 million into Casagrand Distripark in Chennai, Morgan Stanley Real Estate pumping nearly USD 50 million in KSH Infra in Pune and Embassy Industrial Parks investing around USD 50 million in DRA Projects in Bengaluru.
“There is an immense opportunity, backed by the growing demand from e-commerce businesses in the last two years, and the logistics and warehousing sector is consequently upgrading to higher levels of organisation. This shift is visible in various small Grade B and C warehouses converting into large Grade A warehouses equipped with modern facilities – a transformation which has attracted PE entities from US, Canada and Singapore to pump in funds into the sector,” Anarock Capital MD and CEO Shobhit Agarwal said.
JLL’s CEO and Country Head Ramesh Nair said that sectors such as 3PL/logistics, engineering, auto and ancillary, e-commerce, FMCG, retail and telecom and white goods have remained the biggest demand drivers.
According to Knight Frank, the tier II cities such as Coimbatore, Guwahati, Rajpura, Ludhiana, Nagpur, Lucknow, Visakhapatnam, Bhubaneswar and Siliguri are gaining prominence now in terms of the growing demand for warehousing space.
“Of the 29 states, only seven have a dedicated policy framework for the logistics industry. A comparative analysis of the existing logistics policies of seven states shows that Haryana is rated the highest based on the benefits for developers as well as occupiers,” it said.