A report by CBRE, the world’s leading real estate firm, said that India’s Logistics and Industrial space leasing activity increased by 45% to about 10 million sq ft in the first half of 2018 as compared to the first half of 2017, primarily because of the GST implementation last year.
More than 75% of the leasing transactions during the period were performed by e-commerce, retail, 3PL, and manufacturing and engineering companies in order to consolidate or expand their businesses.
“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,” added the report.
In addition to the leasing figures, the average size of leasing spaces also increased by 15,000 sq. ft. during 2018 first half from 75,000 sq. ft. in 2017 first half. Also previous reports on warehouse industry reports were positive.
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“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
Bengaluru (25%), Mumbai (20%) and Delhi-NCR (21%) are the top cities in terms of the overall demand for warehousing and logistics space during the period. The rate of transactions has increased almost everywhere, including Hyderabad and Chennai which reportedly accounted for 10% and 12% increase in the demand for leases.
The new statistics confirm the prediction made in a report by realty research firm JLL earlier this year which had said that the warehousing sector of India will grow exponentially in the coming years. GST is making companies focus on larger and more efficient warehouses rather than continuing with smaller facilities in order to save tax. According to the report, the industry will witness a growth of 112 per cent by 2021, including over 170 per cent increase in grade A warehousing space and around 85 per cent growth in grade B space.
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