Hyderabad sees spurt in warehouse leasing

Of the total transacted space in 2018, 40% was picked up by e-commerce companies

By Author  |   Business Bureau  |  Published: 19th Jun 2019  9:49 pmUpdated: 19th Jun 2019  10:34 pm
warehouse leasing
Around 70% of warehousing activity is concentrated in Jeedimetla-Medchal-Kompally cluster.

Hyderabad: Hyderabad is seeing quantum jump in the warehousing space. The city’s warehousing market clocked in 0.4 million sq m (4 million sq ft) absorption in 2018, achieving 96 per cent year-on-year (y-o-y) surge over the previously recorded transactions in 2017, as per a latest Knight Frank report.

The major driver of the warehousing sector in Hyderabad is e-commerce. Of the total transacted space in the city in 2018, close to 40 per cent of the space was picked up by companies operating in the e-commerce space. Approximately 70 per cent of warehousing activity is concentrated in the Jeedimetla-Medchal-Kompally cluster.

According to the report, India’s national warehousing space is estimated to be 68 million sq m (739 million sq ft) in 2019 for the manufacturing sector which is projected to grow at a compounded annual growth rate (CAGR) of 5 per cent in the next five years to 86 million sq m (922 million sq ft) by 2024.

The report notes that logistics cost in India accounts for 13 per cent-14 per cent of the Gross Domestic Product (GDP), which is substantially higher than the (8-10 per cent) logistics cost to GDP ratio in other developed countries. The primary reason for this is the skewed multi-modal mix and the fact that 60 per cent of freight movement in India happens via roadways.

Total requirement of storage space in the Indian manufacturing sector accounts for 80 per cent of the warehousing market today. Top warehousing markets in India witness a growth of 77 per cent year-on-year in leasing in April 2018-March 2019. The warehousing industry has witnessed massive participation from institutional investors, as well as developers, who have collectively invested over $6.8 billion since 2014, with an average investment per deal of $282 million.

 warehouse leasing

Kolkata witnessed highest year-on-year (YoY) surge with 191 per cent in warehousing leasing volume over 2017 followed by Bengaluru (147 per cent) and Hyderabad (96 per cent).

Shishir Baijal, CMD, Knight Frank India, said, “The growth of the manufacturing sector has been slated to have the most prominent impact on the Indian warehousing industry. Just this sector’s storage requirement forecasted to reach 86 million sq m by 2024, instantly puts the spotlight on scope and growth for developers and investors in the warehousing market.”

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