Economy

Warehousing transactions in 8 cities to grow at 19% CAGR over five years: Knight Frank India

Our Bureau Hyderabad | Updated on July 06, 2021

Demand projected at 273 mn sqft by FY 2022-26; e-commerce to drive growth

The country’s annual warehousing transactions across top eight cities is projected to grow at a compound annual growth rate (CAGR) of 19 per cent to 76.2 mn sq ft by Financial Year 2026, from 31.7 mn sq ft in FY 2021.

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According to Knight Frank India Warehousing Market Report 2021, the projections for the next five years (FY 2022–26) show that the e-commerce segment is expected to take up significant space — an estimated 98 mn sq ft, which is a 165 per cent increase from the preceding period of FY 2017–21. Third-party logistics and other sector companies are expected to take up more space over the same period.

Approximately 22,488 acres have been committed to warehousing in these eight cities, with a potential built-up area of up to 531 mn sq ft. Existing warehousing stock already accounts for 329 mn sq ft on this committed land, leaving about 202 mn sq ft of potential warehousing space in these land parcels.

In FY 2021, warehousing transactions in the top eight cities declined 23 per cent year-on-year (YoY) to 31.7 mn sq ft. Chennai was the only city to witness a growth of 4 per cent YoY to 3.5 mn sq ft, compared with 3.4 mn sq ft in FY 2020. While Bengaluru transaction levels remain stable, Ahmedabad and Pune were the worst-hit markets with a YoY decline of 42 per cent each.  

The report also evaluated 13 secondary markets, which show strong potential as their current share in transactions has grown consistently from 12 per cent in FY 2019 to 23 per cent in FY 2021. Secondary markets accounted for 9.7 mn sq ft of warehousing transactions during FY 2021.

Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The past five quarters have been nothing short of a roller-coaster ride as successive infection waves adversely impacted human life. During this period, most commercial real estate asset classes have been impacted by the headwinds, including the Indian warehousing sector. But inherent strength of the Indian economy, strong domestic consumer base and some unique opportunities arising out of the pandemic have mitigated the impact on the warehousing sector.”

The e-commerce sector is expected to see the maximum growth in warehousing transaction volumes, among all sectors, over the FY 2022-26 period. Though there is a YoY fall in transaction volumes in FY 2021, demand has grown at a CAGR of 23 per cent in the FY 2017-21 periods.

Published on July 06, 2021

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