A dozen new warehousing hubs are likely to emerge in the country in the wake of Goods and Services Tax (GST) rollout in July.

Warehousing stock is expected to increase by 18 per cent to touch 132.5 million sq ft and likely to see investment to the tune of ₹4,500 crore to ₹4,700 crore.

New locations

“As GST is going to be a reality soon, along with a growing demand for quality warehouses by the industry, we are to see an increase of Grade A and B warehousing stock across the country in the next few years, mainly from new locations,” Ramesh Nair, CEO, JLL India, told BusinessLine . Last year, the Grade A and B stock touched 111.9 million sq ft from 96.8 million sq ft in 2015.

“Out of the total 111.9 million square feet warehousing stock in 2016, the Grade A stock was 32.9 million sq ft, while the remaining 79 million sq ft was Grade-B stock,” said Nair.

Implementation of the GST is probably the biggest trigger to warehousing segment in India, said Srinivas N, Managing Director – Industrial Services, JLL India.

Investments in big box and high-quality warehouses are going to be the focus in the short to medium term, he added.

City-wise impact

GST rollout is likely to have a major impact on cities such as Delhi-NCR, which had the maximum warehousing stock in 2016 (29.3 million sq ft), followed by Mumbai Metropolitan Region (20.5 million sq ft). Bengaluru (17.5 million sq ft), Pune (12.8 million sq ft) and Chennai (10.4 million sq ft) come next, followed by Kolkata, Hyderabad and Ahmedabad.

“While the existing eight cities are expected to retain their leading positions after GST rollout, India will also witness the emergence of at least 12 new feeder/ warehousing spoke locations,” said Srinivas.

According to Nair, in Grade A and B warehouse rentals, Pune and Chennai lead the way due to proximity to manufacturing hubs and local market dynamics. These two cities are followed by the bigger metros of Mumbai and Delhi-NCR.

Other cities such as Bengaluru, Ahmedabad, Kolkata and Hyderabad have lower rentals for both Grade A and B warehouses.

“The GST rollout will also usher in an era of upgradation in the warehousing infrastructure,” said Nair.