Hyderabad’s warehousing stock touches 21 million sq ft in H1 2021
An additional supply of about 5 million sq ft of warehousing is currently under various stages of construction and is expected to be completed over the next three years
Hyderabad: Driven by the surge in quality supply, Hyderabad’s total warehousing stock reached about 21 million sq ft as of H1 2021. Further an additional 5 million sq ft is expected to be added over the next three years, continuing the momentum the city is witnessing.
Besides the fillip provided by the infrastructural intervention, the policies introduced by the Government of Telangana Including Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS), have supported the growth of the State’s Industrial & Warehousing (I&W) sector, according to real estate consulting firm CBRE, in its latest research report.
A rapidly expanding industrial base coupled with rising demand from e-commerce and third party logistics companies drove warehousing activity in Hyderabad. As per CBRE’s report, warehouse space take-up in Hyderabad was about 11 million sq ft during 2018-H1 2021, with leasing predominantly concentrated in semi-investment grade properties.
Warehouse leasing during H1 2021 had been driven by retail players (43 per cent), followed by third party logistics (19 per cent) and e-commerce companies (15 per cent). Also, the average deal size has been increasing at a steady pace over the past three years, owing to growing preference for larger spaces with a view to develop fulfillment centres.
The launch of better-quality warehouses along with demand from occupiers to lease large-sized spaces led to an increase in rental values of about 5-14 per cent during H1 2021across micro-markets in Hyderabad.
Anshuman Magazine, chairman, India & South-East Asia, Middle East & Africa, CBRE, said, “With focused policy initiatives fuelled by an unwavering aim to boost the I&W sector, India is emerging as an alternate supply chain and manufacturing destination, giving a fillip to the nation’s warehousing sector. Telangana’s policy initiatives along with a strong infrastructure impetus, continues to augur well for the country’s overall development”.
Future outlook
Policy interventions and dedicated sectoral policies are expected to boost investments in the State’s I&W sector. Proposals for industrial corridors and development of a regional ring road are anticipated to improve logistics efficiencies, thus boosting industrial growth in Hyderabad.
A ‘networked’ supply chain model is likely to be adopted by manufacturers, which would be more agile, sustainable, and resilient to external shocks.
E-commerce is likely to drive warehouse leasing demand as the pandemic accelerated the shift to omnichannel retailing. On the other hand, most occupiers would be inclined towards locating in investment-grade, compliant spaces to meet long-term needs.
Investment-grade projects are likely to dominate upcoming supply. Strong fundamentals and sustained rental growth are likely to further drive investor interest towards the sector.
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