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Coronavirus impact: Warehousing demand falls 11% during FY' 20, says Knight Frank

Despite fall in demand, the rentals increased by 4-7 per cent in Grade-A warehousing projects across these eight cities

twitter-logoPTI | July 2, 2020 | Updated 15:44 IST
Coronavirus impact: Warehousing demand falls 11% during FY' 20, says Knight Frank
Mumbai saw 8 per cent growth in demand at 7.5 million sq ft, while Ahmedabad witnessed a 5 per cent rise in demand at 5.1 million sq ft

Warehousing demand fell 11 per cent during the last fiscal year at 41.3 million sq ft across eight major cities due to economic slowdown, according to property consultant Knight Frank. The demand for warehousing, which also includes industrial space for light manufacturing, stood at 46.4 million sq ft in 2018-19 fiscal across 8 cities - National Capital Region, Mumbai, Ahmedabad, Pune, Bengaluru, Kolkata, Chennai and Hyderabad, the consultant said in its latest report 'India Warehousing Market Report 2020'.

Despite fall in demand, the rentals increased by 4-7 per cent in Grade-A warehousing projects across these eight cities. Post GST, the asset class has received institutional investment commitments of USD 6.5 billion. Knight Frank India has pegged the existing warehousing stock across eight cities at 307 million sq ft. The existing land committed to warehousing across the top eight cities of India has the potential to add 193 million square feet of new warehousing supply, it added. According to the data, warehousing demand fell 32 per cent in the national capital region (NCR) to 8.6 million sq ft last fiscal.

Mumbai saw 8 per cent growth in demand at 7.5 million sq ft, while Ahmedabad witnessed a 5 per cent rise in demand at 5.1 million sq ft. Warehousing demand in Pune went up 42 per cent to 4.9 million sq ft but declined in Bengaluru 23 per cent to 4.3 million sq ft. Kolkata witnessed 14 per cent fall to 3.9 million sq ft, while Chennai saw a 19 per cent decline to 3.4 million sq ft.

The demand in Hyderabad dipped 14 per cent to 3.4 million sq ft. "The demand for warehousing has moderated last fiscal due to economic slowdown," Knight Frank India CMD Shishir Baijal told reporters. He said the demand is expected to fall during the current fiscal year due to the COVID-19 pandemic.

However, Baijal said the warehousing market has remained largely resilient recording growth of 44 per cent CAGR in the last three years."Despite the economic slowdown and the pandemic, demand has especially been strong from industries such as 3PL (third-party logistics), e-commerce, FMCG and Pharmaceutical, which is expected to continue in fiscal 2021," Baijal said.

Out of the total demand, third party logistics firms contributed 36 per cent, while e-commerce and manufacturing companies accounted for 23 per cent each. Warehousing segment has been gaining traction with investors in the last few years due to the potential of India's domestic consumption and overall GDP growth, he added.

According to the report, the warehousing demand in the secondary market, which includes 11 tier II and III cities, increased to 6.4 million sq ft from 5.3 million sq ft. These 11 cities are Ambala-Rajpura, Guwahati, Patna, Coimbatore, Bhubaneshwar, Lucknow, Ludhiana, Jaipur, Indore, Siliguri and Vadodara.

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