Economy

Hyderabad’s warehousing demand has grown 41% in 3 years: Knight Frank India

Our Bureau Hyderabad | Updated on July 02, 2020 Published on July 02, 2020

The Hyderabad warehousing market is a consumption centre driven by e-commerce, retail and FMCG. File photo shows Amazon’s fulfilment warehousing facility in the city   -  The Hindu

Has potential to more than double existing stock to 29 million sq ft, says report

Hyderabad’s warehousing market witnessed 3.4 million sq ft leasing activity in FY20, showing the highest warehousing development potential amongst the top eight cities in India, according to the ‘India Warehousing Market Report – 2020’ of Knight Frank India.

The city has the potential to more than double its existing stock from 13 million sq ft to 29 million sq ft. This comes on the back of a land pool of approximately 1,291 acres committed to warehousing. It has grown at about 41 per cent in the last three years, said the report.

Samson Arthur, Branch Director, Hyderabad, at Knight Frank, said: “The Hyderabad warehousing market is a consumption centre driven by e-commerce, 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 FY20. While warehousing market demand has been affected in FY20 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.”

GST led to a transformative shift to efficiency-based location and size strategy rather than the erstwhile tax saving focussed objective. The warehousing asset class in the city has seen a robust compounded annual growth rate (CAGR) of 41 per cent for the period FY 2017-20.

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 FY20, are the major drivers of this growth. The warehousing activity in Hyderabad is largely concentrated in the clusters of Medchal, Patancheru and Shamshabad. Of the three, a significant 87 per cent of the FY20 transaction activity was concentrated in the Medchal cluster. Rent appreciations have been reported across locations in the three warehousing clusters.

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Published on July 02, 2020
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