Logistics and warehousing sector may reach $215B by 2020
With nearly $1.1 billion of private equity pumped during the last two years, the Indian logistics and warehousing sector is expected to grow to $215 billion by 2020, experts said.
According to report by property consultant Knight Frank, total warehousing space is estimated grow at a CAGR of five percent in the next five years to 922 million sq ft by 2024.
Another survey released by JLL, which projected the industry to grow at $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 ecommerce 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 sq ft of property absorption, it is expected to clock around 38 million sq ft 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 $200 million. While LOGOS India invested nearly $100 million into Casagrand Distripark in Chennai, Morgan Stanley Real Estate pumped nearly $50 million in KSH Infra in Pune, and Embassy Industrial Parks invested around $50 million in DRA Projects in Bengaluru.
Anarock Capital MD and CEO, Shobhit Agarwal, added,
"There is an immense opportunity, backed by the growing demand from ecommerce 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."
JLL's CEO and Country Head Ramesh Nair said that sectors such as 3PL/logistics, engineering, auto and ancillary, ecommerce, FMCG, retail, and telecom and white goods have remained the biggest demand drivers.
According to Knight Frank, 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.