Demand for logistics and warehousing space in India outstrips supply, reveals JLL’s latest report, titled ‘Indian Logistics and Warehousing: Tracing the Lifecycle’.
According to the report, the annual demand of around 32 million square feet has outstripped the supply of 31 million square feet. This has happened for the first time in the last four years.
With the January-March period of 2019 witnessing 8.4 million square feet of absorption, it is expected to clock around 38 million square feet by end of 2019.
“With high demand, lease transactions have remained high so far,” the report said. “Alongside the rise in transactions, the share of Grade A spaces leases have also gone up in the past four years,” it added.
Of the total 32 million square feet of industrial and logistics leases in 2018, 56 per cent were Grade A spaces.
‘Huge potential’
Sectors such as 3PL/logistics, engineering, auto & ancillary, e-commerce, FMCG, retail, and telecom and white goods have remained the biggest demand drivers. As a result of the high demand, logistics sector is expected to grow to $215 billion by 2020.
Ramesh Nair, CEO & Country Head, JLL India said, “Favourable investment regulations have made the deployment of development funds a lot easier than it used to be in the past. Moreover, the infrastructure status has added strength to the development pace. GST implementation has brought in a uniform tax regime and has removed the challenges relating to logistics supply chain, making it easier for operators in the space to expand across geographies.”
Yogesh Shevade, Head, Industrial Services, JLL India, said, “There is huge potential in the logistics and warehousing sector. With high demand for high-quality logistics facilities and increasing market maturity, the space is set to grow from this stage. However, development side continues to witness challenges on account of problems such as land aggregation, tax parity etc.”
“Hopefully, we will witnessing easing of these challenges with further reforms,” Shevade added.