Hyderabad warehousing demand grows at 41% CAGR in last 3 years: Knight Frank

The city has the potential to more than double its existing stock from 13 mn sq ft to 29 mn sq ft. This comes on the back of a land pool of approximately 1,291 acres committed to warehousing, according to the latest report ‘India Warehousing Market Report

By Author  |  Business Bureau  |  Published: 2nd Jul 2020  4:31 pm

Hyderabad: Hyderabad’s warehousing market witnessed 3.4 mn sq ft leasing activity in FY2020. The city showed the highest warehousing development potential (by 2.19 times) amongst the top eight cities in India. The warehousing asset class in the city has seen a compounded annual growth rate (CAGR) of 41 per cent for the period FY 2017-2020.

The city has the potential to more than double its existing stock from 13 mn sq ft to 29 mn sq ft. This comes on the back of a land pool of approximately 1,291 acres committed to warehousing, according to the latest report ‘India Warehousing Market Report – 2020’ by Knight Frank India.

GST led to a transformative shift to efficiency-based location and size strategy rather than the erstwhile tax saving focused objective. The major drivers of the warehousing sector in Hyderabad are e-commerce, retail and the Fast Moving Consumer Goods (FMCG) / Fast Moving Consumer Durables (FMCD) industries, which together contributed to 50 per cent of the total transacted space in FY 2020.

Warehousing activity in Hyderabad is largely concentrated in three major clusters of Medchal, Patancheru and Shamshabad. Of the three, a significant 87 per cent of the FY2020 transaction activity was concentrated in the Medchal cluster. Rent appreciations have been reported across locations in the three warehousing clusters.

According to Samson Arthur, branch director–Hyderabad said, “The Hyderabad warehousing market is a consumption centre driven by ecommerce, retail and FMCG. With large e-commerce and FMCG players preferring to outsource their logistics and warehousing needs, the share of third-party logistics in the transactions pie has gone up to 31 per cent in FY 2020. While warehousing market demand has been affected in FY 2020 due to the economic slowdown and disruption caused by the pandemic, the market’s underlying strength is evident in the 41 per cent annual growth it has commanded over the past three years. Investment interest continues to remain strong in this property type and should fuel its momentum over the longer term.”


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