Leasing activity in India’s Industrial and Logistics space gained 45% in the first half of 2018 to close to 10 million sq.ft. of space as compared with H1 2017, mainly owing to GST implementation, CBRE said in a report.
The transactions were primarily driven by consolidation and expansion initiatives of e-commerce, 3PL, retail, and engineering and manufacturing companies, which together accounted for more than 75% of the leasing during the period.
“This is as a result of the policy reforms that the sector has undergone in the past two years (particularly the implementation of the GST), as more and more corporates in this sector consolidate their operations and locate closer to consumption hubs, thereby driving demand for larger warehouses,” the realty firm said.
The average size of acquired space increased from 75,000 sq. ft. during H1 2017 to close to 90,000 sq. ft. during H1 2018.
Bengaluru tops
The overall demand for logistics and warehousing space was largely concentrated in Bengaluru (25%), Delhi-NCR (21%) and Mumbai (20%). Chennai and Hyderabad also reported sizeable transaction activity and accounted for about 12% and 10% of the demand respectively. Smaller cities such as Kolkata, Ahmedabad and Pune collectively held a share of 12%. “Going forward, we foresee the use of innovative technology solutions being the game-changer for the sector,” Anshuman Magazine, chairman, India and South East Asia, CBRE, said in a statement.
“As the sector witnesses the use of technology, coupled with the government’s reform push, corporates across all sectors would be driven to opt for large, modern warehouses,” he said.
“The entry of various private equity firms and foreign players in the Indian logistics market would boost quality supply, hence propelling demand. Cities such as Mumbai, Pune and Chennai would remain major investment destinations, with Delhi-NCR and Bengaluru also being on the investors’ radar,” he added.