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BusinessHyderabad’s warehousing stock touches 21 million sq ft in H1 2021

Hyderabad’s warehousing stock touches 21 million sq ft in H1 2021

Published: 16th Aug 2021 4:32 pm

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.

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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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