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1、INDIA WAREHOUSING MARKET REPORT 2021INDIA WAREHOUSING MARKET REPORT 2021knightfrank.co.in/researchINDIA WAREHOUSING MARKET REPORT 2021INDIA WAREHOUSING MARKET REPORT 2021knightfrank.co.in/researchINDIA WAREHOUSING MARKET REPORT 2021F O R E W O R DThe past five quarters have been nothing short of a r
2、oller coaster ride.The prolonged COVID-19 pandemic forced us to navigate tight turns and steep slopes of successive infection waves that adversely impacted human life,and the consequent state-imposed lockdowns constricted economic activity to a bare minimum during its peak.As a human race,our collec
3、tive response to combat the virus exhibits strong hope.Vaccination progress in a populous and diverse country like ours will bring stability,however,the prognosis of an impending third wave implies that we need to remain ever vigilant and not let our guards down as we resurrect human lives and busin
4、ess.During this prolonged pandemic period,most commercial real estate asset classes have suffered strong headwinds.In comparison,the Indian warehousing sector was adversely impacted to a lesser magnitude on key business parameters.In fact,the sector shows great promise with recognition of its pivota
5、l role as a critical link between the manufacturer and the end consumer.Efficient logistics and distribution will be a key determinant of a business success in todays ultra-competitive environment.In this report,we assess the warehousing market dynamics of key primary and secondary cities in India o
6、n parameters of demand,supply,occupancy and price.We also take note of pandemic-influenced transient as well as long-term impact areas that are worthy of attention for business participants.For instance,on the demand side,while we capture a stronger e-commerce occupier trend and rising prominence of
7、 secondary cities,the supply side has seen a strong trend of institutional participation and large,high quality warehouse spaces with enhanced automation within the warehouse facility.The warehousing space per capita in India remains low compared to developed economies.With the critical business obj
8、ectives that a supply chain serves,we believe that industrial and warehousing spaces have a long runway for growth in this country.This premise also builds a pathway to progress on the maturity curve for the sector and promotes increased institutional participation.We gathered great learnings while
9、making this report and I am especially thankful to our industry stalwarts for contributing to this endeavor.I hope the report adds value to you and opens new business vistas for this promising sector.I look forward to your feedback and wish you and your loved ones a safe and healthy life.Shishir Bai
10、jalChairman and Managing DirectorINDIA WAREHOUSING MARKET REPORT 2021C O N T E N T SPage no.040 10 20 30 40 50 6AhmedabadAmbala-RajpuraBengaluruBhubaneswarChennaiCoimbatoreGuwahatiHyderabadKolkataLucknowLudhianaMumbaiNCRPuneSuratVapiVisakhapatnamAgraIndoreJaipurNagpurKochiPatnaSiliguriVadodaraPage n
11、o.05Page no.10Page no.15Page no.22Page no.91F O R E W O R DC O V I D-1 9 I M PA C T O N WA R E H O U S I N G M A R K E TI N D I A WA R E H O U S I N G M A R K E T O P P O R T U N I T YWA R E H O U S I N G M A R K E T A N A LY S I SWA R E H O U S I N G M A R K E T SOT H E RWA R E H O U S I N G M A R
12、K E T S4INDIA WAREHOUSING MARKET REPORT 2021F O R E W O R DThe past five quarters have been nothing short of a roller coaster ride.The prolonged COVID-19 pandemic forced us to navigate tight turns and steep slopes of successive infection waves that adversely impacted human life,and the consequent st
13、ate-imposed lockdowns constricted economic activity to a bare minimum during its peak.As a human race,our collective response to combat the virus exhibits strong hope.Vaccination progress in a populous and diverse country like ours will bring stability,however,the prognosis of an impending third wav
14、e implies that we need to remain ever vigilant and not let our guards down as we resurrect human lives and business.During this prolonged pandemic period,most commercial real estate asset classes have suffered strong headwinds.In comparison,the Indian warehousing sector was adversely impacted to a l
15、esser magnitude on key business parameters.In fact,the sector shows great promise with recognition of its pivotal role as a critical link between the manufacturer and the end consumer.Efficient logistics and distribution will be a key determinant of a business success in todays ultra-competitive env
16、ironment.In this report,we assess the warehousing market dynamics of key primary and secondary cities in India on parameters of demand,supply,occupancy and price.We also take note of pandemic-influenced transient as well as long-term impact areas that are worthy of attention for business participant
17、s.For instance,on the demand side,while we capture a stronger e-commerce occupier trend and rising prominence of secondary cities,the supply side has seen a strong trend of institutional participation and large,high quality warehouse spaces with enhanced automation within the warehouse facility.The
18、warehousing space per capita in India remains low compared to developed economies.With the critical business objectives that a supply chain serves,we believe that industrial and warehousing spaces have a long runway for growth in this country.This premise also builds a pathway to progress on the mat
19、urity curve for the sector and promotes increased institutional participation.We gathered great learnings while making this report and I am especially thankful to our industry stalwarts for contributing to this endeavor.I hope the report adds value to you and opens new business vistas for this promi
20、sing sector.I look forward to your feedback and wish you and your loved ones a safe and healthy life.Shishir BaijalChairman and Managing DirectorINDIA WAREHOUSING MARKET REPORT 2021C O N T E N T SPage no.040 10 20 30 40 50 6AhmedabadAmbala-RajpuraBengaluruBhubaneswarChennaiCoimbatoreGuwahatiHyderaba
21、dKolkataLucknowLudhianaMumbaiNCRPuneSuratVapiVisakhapatnamAgraIndoreJaipurNagpurKochiPatnaSiliguriVadodaraPage no.05Page no.10Page no.15Page no.22Page no.91F O R E W O R DC O V I D-1 9 I M PA C T O N WA R E H O U S I N G M A R K E TI N D I A WA R E H O U S I N G M A R K E T O P P O R T U N I T YWA R
22、 E H O U S I N G M A R K E T A N A LY S I SWA R E H O U S I N G M A R K E T SOT H E RWA R E H O U S I N G M A R K E T S4INDIA WAREHOUSING MARKET REPORT 2021C OV I D-1 9 I M PAC T being a storage depot to a virtual pit-stop that facilitates inventory management,secondary packaging,cross-docking and e
23、xtraction of products in the least possible time.With the COVID-19 pandemic threatening to push India off its economic growth trajectory,the real estate sectors resilience has been tested to its limit.While demand in other commercial real estate asset classes like hospitality,retail and office have
24、been severely impacted during the previous year,the warehousing market has been relatively less adversely impacted.Amidst the upheavals in the overall market dynamics which have seen market players react and adjust in the short term to transient events such as labour shortages and increase in constr
25、uction cost,we believe that the warehousing sector will see some significant trends taking shape over the medium to long term.Hence,taking cognizance of the underlying dynamics of the segment,Knight Frank identifies the following themes as key catalysts for the sector in times to come.Logistics and
26、warehousing constitute a critical link in the chain that connects the manufacturer to the eventual consumer.It is the efficiency of the logistics and distribution machinery of a business that dictates the reach time of their goods to the market,and cost efficiencies prove to be a big factor in enabl
27、ing businesses to stay relevant in todays uber competitive environment.This is especially true in the present-day internet age where businesses are forced to not just continually enhance their service but also cut costs to acquire and retain consumers.Managing cash flow is one of the biggest challen
28、ges a business faces while cutting costs,and inventory is the most significant component that locks up cash.Businesses need to ensure that adequate inventory is maintained to prevent a stock-out during a spike in demand.While accurate demand estimation forms the foundation of this endeavour,it is th
29、e efficiency of the logistics chain that determines the cost and time saving that can be achieved.This constant need to reduce the inventory cycle is radically transforming the role of the warehouse from simply INDIA WAREHOUSING MARKET REPORT 2021E-commerce sector growth accelerates due to pandemic
30、restrictions The e-commerce sector has been driving demand for logistics and warehousing across global markets and has emerged as the most prominent driver of Indian warehousing market volumes along with the 3PL sector.This sectors share in transactions has grown from 18%in FY 2017 to 31%in FY 2021.
31、However,despite the surge in e-commerce adoption over the past few years,the fact that penetration of e-commerce as a share of the total 1retail stood at just 4.7%in India in 22019 compared to 15.9%in China 3and 19.2%in the United Kingdom,depicts the long runway for the growth that this occupier seg
32、ment has in the country.123(Source:EY,Knight Frank,ONS)The pandemic has accelerated the trend of online purchases which had already taken root well before.Even as the pandemic caused the overall transaction volumes to fall in FY 2021,the share of e-commerce grew substantially from 23%in FY 2020 to t
33、he current level and eclipsed that of the 3PL sector for the first time.It is to be noted that part of the total 3PL demand is also constituted of the e-commerce segment.Increase in inventory levels to address stock-outs The primary objective of an efficient supply chain is to minimize inventory lev
34、els so that capital is not locked in storage or transit and capital productivity is optimized.This approach relies on the seamless operation of the entire supply chain right from the manufacturer to the end-consumer.Any disruption in a lean supply chain,like the one caused by the pandemic,not only i
35、mpacts delivery to the consumer but severely impacts the business as well.To address this contingency,occupiers have been consciously moving toward increasing inventory levels since the national lockdown was relaxed in June 2020.This practice gained more traction in 2021 especially with the onset of
36、 the second wave of the pandemic.The increased need for stocking has led to an increase in storage requirements with occupiers taking up more rack-space in existing facilities.Stocking requirements have gone up 3-4x in preparation for the prolonged pandemic.While the increased stocking requirements
37、will eventually taper off as the pandemic subsides,we believe that they will not revert to the levels prevalent before the pandemic as the threat of similar disruptions in future will need to be factored in to the supply chain.Consolidation takes a backseat as players re-strategize supply chain When
38、 the GST law came into being in 2017,companies had started rationalizing their warehousing needs based purely on logistical merit and focused on consolidating their warehousing footprint to improve efficiency and throughput.While consolidation has undeniable benefits,it also increases the dependence
39、 of the supply chain on a lesser number of warehouses than existed before.The pandemic exposed this limitation as the logistics operations of several companies were compromised with LONG-TERM IMPACT AREASsome of their warehousing locations and cargo transit corridors either being placed under lockdo
40、wn or facing labour shortage.A more dispersed warehousing network could have enabled them to process orders despite closure of their primary warehouses.The trend of consolidating warehouses will sustain in the long term due to the several benefits of scale that can be derived but it is unlikely that
41、 companies will want to risk it in the current pandemic scenario.Similarly,it is also unlikely that companies will consolidate warehouses to the same extent that they had planned before the pandemic as they will need to factor similar risks in their consolidation plans going forward.Benefit to India
42、 from decentralization of global manufacturing China accounted for 28.7%of global manufacturing output according to the United Nations Statistics Division.Global supply chains were heavily impacted when international travel as well as movement of goods to and from China were severely curtailed by ot
43、her countries to prevent the spread of the pandemic.This prompted global corporations to scout for other manufacturing destinations so that their businesses are not overly dependent on any single manufacturing destination.The Indian government launched a Production Linked Incentive(PLI)scheme to att
44、ract large investments in the mobile phone and specified electronic component manufacturing units.In November 2020,the PLI scheme was extended to ten more sectors,including food processing,battery storage,O N WA R E H O U S I N G M A R K E T56INDIA WAREHOUSING MARKET REPORT 2021C OV I D-1 9 I M PAC
45、T being a storage depot to a virtual pit-stop that facilitates inventory management,secondary packaging,cross-docking and extraction of products in the least possible time.With the COVID-19 pandemic threatening to push India off its economic growth trajectory,the real estate sectors resilience has b
46、een tested to its limit.While demand in other commercial real estate asset classes like hospitality,retail and office have been severely impacted during the previous year,the warehousing market has been relatively less adversely impacted.Amidst the upheavals in the overall market dynamics which have
47、 seen market players react and adjust in the short term to transient events such as labour shortages and increase in construction cost,we believe that the warehousing sector will see some significant trends taking shape over the medium to long term.Hence,taking cognizance of the underlying dynamics
48、of the segment,Knight Frank identifies the following themes as key catalysts for the sector in times to come.Logistics and warehousing constitute a critical link in the chain that connects the manufacturer to the eventual consumer.It is the efficiency of the logistics and distribution machinery of a
49、 business that dictates the reach time of their goods to the market,and cost efficiencies prove to be a big factor in enabling businesses to stay relevant in todays uber competitive environment.This is especially true in the present-day internet age where businesses are forced to not just continuall
50、y enhance their service but also cut costs to acquire and retain consumers.Managing cash flow is one of the biggest challenges a business faces while cutting costs,and inventory is the most significant component that locks up cash.Businesses need to ensure that adequate inventory is maintained to pr
51、event a stock-out during a spike in demand.While accurate demand estimation forms the foundation of this endeavour,it is the efficiency of the logistics chain that determines the cost and time saving that can be achieved.This constant need to reduce the inventory cycle is radically transforming the
52、role of the warehouse from simply INDIA WAREHOUSING MARKET REPORT 2021E-commerce sector growth accelerates due to pandemic restrictions The e-commerce sector has been driving demand for logistics and warehousing across global markets and has emerged as the most prominent driver of Indian warehousing
53、 market volumes along with the 3PL sector.This sectors share in transactions has grown from 18%in FY 2017 to 31%in FY 2021.However,despite the surge in e-commerce adoption over the past few years,the fact that penetration of e-commerce as a share of the total 1retail stood at just 4.7%in India in 22
54、019 compared to 15.9%in China 3and 19.2%in the United Kingdom,depicts the long runway for the growth that this occupier segment has in the country.123(Source:EY,Knight Frank,ONS)The pandemic has accelerated the trend of online purchases which had already taken root well before.Even as the pandemic c
55、aused the overall transaction volumes to fall in FY 2021,the share of e-commerce grew substantially from 23%in FY 2020 to the current level and eclipsed that of the 3PL sector for the first time.It is to be noted that part of the total 3PL demand is also constituted of the e-commerce segment.Increas
56、e in inventory levels to address stock-outs The primary objective of an efficient supply chain is to minimize inventory levels so that capital is not locked in storage or transit and capital productivity is optimized.This approach relies on the seamless operation of the entire supply chain right fro
57、m the manufacturer to the end-consumer.Any disruption in a lean supply chain,like the one caused by the pandemic,not only impacts delivery to the consumer but severely impacts the business as well.To address this contingency,occupiers have been consciously moving toward increasing inventory levels s
58、ince the national lockdown was relaxed in June 2020.This practice gained more traction in 2021 especially with the onset of the second wave of the pandemic.The increased need for stocking has led to an increase in storage requirements with occupiers taking up more rack-space in existing facilities.S
59、tocking requirements have gone up 3-4x in preparation for the prolonged pandemic.While the increased stocking requirements will eventually taper off as the pandemic subsides,we believe that they will not revert to the levels prevalent before the pandemic as the threat of similar disruptions in futur
60、e will need to be factored in to the supply chain.Consolidation takes a backseat as players re-strategize supply chain When the GST law came into being in 2017,companies had started rationalizing their warehousing needs based purely on logistical merit and focused on consolidating their warehousing
61、footprint to improve efficiency and throughput.While consolidation has undeniable benefits,it also increases the dependence of the supply chain on a lesser number of warehouses than existed before.The pandemic exposed this limitation as the logistics operations of several companies were compromised
62、with LONG-TERM IMPACT AREASsome of their warehousing locations and cargo transit corridors either being placed under lockdown or facing labour shortage.A more dispersed warehousing network could have enabled them to process orders despite closure of their primary warehouses.The trend of consolidatin
63、g warehouses will sustain in the long term due to the several benefits of scale that can be derived but it is unlikely that companies will want to risk it in the current pandemic scenario.Similarly,it is also unlikely that companies will consolidate warehouses to the same extent that they had planne
64、d before the pandemic as they will need to factor similar risks in their consolidation plans going forward.Benefit to India from decentralization of global manufacturing China accounted for 28.7%of global manufacturing output according to the United Nations Statistics Division.Global supply chains w
65、ere heavily impacted when international travel as well as movement of goods to and from China were severely curtailed by other countries to prevent the spread of the pandemic.This prompted global corporations to scout for other manufacturing destinations so that their businesses are not overly depen
66、dent on any single manufacturing destination.The Indian government launched a Production Linked Incentive(PLI)scheme to attract large investments in the mobile phone and specified electronic component manufacturing units.In November 2020,the PLI scheme was extended to ten more sectors,including food
67、 processing,battery storage,O N WA R E H O U S I N G M A R K E T56INDIA WAREHOUSING MARKET REPORT 2021automobile components and specialty steel.Several global firms such as Samsung,Foxconn,Hon Hai,Rising Star,Wistron and Pegatron have availed the benefits of these schemes.Notwithstanding the competi
68、tion from countries like Vietnam,Thailand,Indonesia and Philippines,industrial demand should get a boost as global corporations set up manufacturing operations in India.Industrial demand comprised 15%of the total space transacted in Indias top eight cities during FY 2021,a marginal increase from 14%
69、in the preceding year.Cold chain warehousing gains ground Growth in organized food delivery and e-commerce is the key driver for the cold chain sector in India.Food retailing has come of age and the growing penetration of organized food retail in the country has dictated the development of efficient
70、 cold chain supply management.The pharmaceutical sector is also a big demand driver for temperature-controlled storage and distribution.COVID-19 vaccines and API drug formulations in particular will require significant additions in Indias cold chain warehousing capacity.Cold storage market remains a
71、n unorganized and fragmented play in the country.The need for a variety of temperature-controlled solutions extends from perishable categories like fruits,vegetables,dairy,fish and meat to pharmaceuticals and others.With increasing category focus,cold storage segment will receive greater attention f
72、rom government and stakeholders alike.In-city warehousing to ride on accelerated e-commerce demand The constant need to reduce delivery timelines had always made the entry of in-city warehousing in the Indian market just a matter of time.With the pandemic vaulting the e-commerce sector on a higher g
73、rowth trajectory and the entry of players such as the Tata Group and Reliance Group in this highly competitive space,multi-storey warehouses could become mainstream phenomena much earlier than expected.Besides facilitating optimum land utilization in congested cities such as Mumbai,multi-storey ware
74、housing will effectively reduce delivery timelines and transportation costs.Such solutions are already in place in other Asian markets such as Singapore,Hong Kong and Tokyo.3PL players have been scouting for in-city development opportunities across Mumbai,Delhi and Bengaluru.The high real estate cos
75、ts in these cities make it a challenging venture and turnkey opportunities such as defunct mills,factory units or shuttered malls are being considered.Institutionalization of warehousing segment to accelerate Uninterrupted warehouse park operations have proved to be a key determinant of the strength
76、 of an organizations supply chain during the extreme disruptions faced due to the lockdown.Institutional spaces that are backed by warehousing expertise that most other players are hard pressed to match were better geared to tackle the exigencies posed by the pandemic and ensure business continuity.
77、Adherence to compliance and modernization of warehousing properties and services are strong trends that are only strengthening with time as more and more occupiers covet the boost in efficiencies that these practices invariably result in.Warehouse lease tenures are getting longer ranging from 6-9 ye
78、ars and even more in some cases,making it an attractive commercial real estate play in the Indian market.Warehouse development demands significant investment and expertise that institutions are well suited to deliver.We expect that in the current uncertain environment and shrinking margins,instituti
79、onal abilities will be valued even more and lead to participation of bigger developers and investors in the countrys warehousing segment,especially as they have better access to lower-cost capital.Need for warehousing automation increases A host of factors in the evolving warehousing ecosystem will
80、push occupiers to adopt automation for processes such as storage,retrieval and relocation of goods.Operators have been slow to adopt automation in their warehouses due to the high costs involved,but the disruption in warehouse operations caused by increased throughput requirement of sectors like e-c
81、ommerce will increase technology adoption going forward.The adoption of automation and other technologies such as warehouse management systems is still very low in the Indian market compared to developed markets.E-commerce,as a key occupier segment,has been at the forefront of technology adoption in
82、 supply chain operations due to its much higher service delivery requirements.However,we expect other segments too will move in this direction leading to increased capital expenditure on this front from occupiers.Occupiers will consider implementation of technology at the design stage instead of ret
83、rofitting as was seen in earlier times.Occupiers looking to SHARE OF SECONDARY MARKETSNote:The secondary market basket comprises 13 markets:Lucknow,Bhubaneswar,Coimbatore,Ambala-Rajpura Belt,Guwahati,Indore,Jaipur,Ludhiana,Patna,Siliguri,Vadodara,Surat and Vapi.FY 2020FY 2021Warehousing boxes get bi
84、gger with increased cargo complexity and throughput requirements The need to manage a large number of SKUs and handle faster movement of cargo has been created and accelerated by the sophisticated e-commerce and 3PL occupier groups.Further,with enhanced standards of compliance as well as increased c
85、apex within the warehouse facility towards automation,occupiers are preferring larger boxes.In several instances now,the scale of a single warehouse box has been seen to increase from under 100,000 sq ft to over 500,000 sq ft over the last few years.Cost of construction sees a sharp riseThe sharp dr
86、op in consumer and industrial demand caused by the lockdowns in early FY 2021 caused raw material prices to plummet,and the subsequent recovery in global and domestic demand in the later part of the year caused prices of raw materials such as steel and cement to spike.Steel prices have spiked betwee
87、n 36%to 39%YoY across Mumbai,Delhi,Kolkata and Chennai according to the Center for Monitoring Indian Economy(CMIE)in FY 2021.Moreover,labour costs have also risen substantially during the pandemic.Warehousing being a low margin business,will find it more challenging to cope with the rise in construc
88、tion cost,especially in a scenario where rents have remained subdued.Management of labour availability during the second wave gets better The first lockdown in 2020 had sparked an exodus of labour from cities to their home-towns as they lost their livelihoods and could no longer afford to stay in th
89、e cities in an uncertain environment.Their return to the city as the lockdowns eased and normalcy returned was also much delayed causing development activity to be further impeded.As the second wave of infections hit the economy,developers were better prepared and pre-empted another labour exodus by
90、 providing them shelter,subsistence wages and other material assurances.Moreover,the lockdown during the second wave was less stringent and construction activity was permitted.Nevertheless,some exodus of labour did take place even during the second wave.SHORT-TERM IMPACT AREAS15%23%avoid such capex
91、will increasingly prefer the services of 3PL(Third Party Logistics)operators.Secondary warehousing markets receive further boost in growth The share of secondary markets in the total transactions recorded in the country has grown consistently from just 12%in FY 2019 to 23%in FY 2021.The disruption o
92、f supply chains in the previous year has only accelerated this trend with consumers being forced to turn to the online marketplace.Secondary markets accounted for 0.9 mn sq m(9.7 mn sq ft)of warehousing transactions during the year The fact that transaction volumes in these secondary markets have gr
93、own 31%YoY in FY 2021(albeit on a lower base),while the eight prime markets saw demand fall 23%YoY,underscores the increasing traction of these emerging warehousing markets.FY 201912%INDIA WAREHOUSING MARKET REPORT 202178INDIA WAREHOUSING MARKET REPORT 2021automobile components and specialty steel.S
94、everal global firms such as Samsung,Foxconn,Hon Hai,Rising Star,Wistron and Pegatron have availed the benefits of these schemes.Notwithstanding the competition from countries like Vietnam,Thailand,Indonesia and Philippines,industrial demand should get a boost as global corporations set up manufactur
95、ing operations in India.Industrial demand comprised 15%of the total space transacted in Indias top eight cities during FY 2021,a marginal increase from 14%in the preceding year.Cold chain warehousing gains ground Growth in organized food delivery and e-commerce is the key driver for the cold chain s
96、ector in India.Food retailing has come of age and the growing penetration of organized food retail in the country has dictated the development of efficient cold chain supply management.The pharmaceutical sector is also a big demand driver for temperature-controlled storage and distribution.COVID-19
97、vaccines and API drug formulations in particular will require significant additions in Indias cold chain warehousing capacity.Cold storage market remains an unorganized and fragmented play in the country.The need for a variety of temperature-controlled solutions extends from perishable categories li
98、ke fruits,vegetables,dairy,fish and meat to pharmaceuticals and others.With increasing category focus,cold storage segment will receive greater attention from government and stakeholders alike.In-city warehousing to ride on accelerated e-commerce demand The constant need to reduce delivery timelines
99、 had always made the entry of in-city warehousing in the Indian market just a matter of time.With the pandemic vaulting the e-commerce sector on a higher growth trajectory and the entry of players such as the Tata Group and Reliance Group in this highly competitive space,multi-storey warehouses coul
100、d become mainstream phenomena much earlier than expected.Besides facilitating optimum land utilization in congested cities such as Mumbai,multi-storey warehousing will effectively reduce delivery timelines and transportation costs.Such solutions are already in place in other Asian markets such as Si
101、ngapore,Hong Kong and Tokyo.3PL players have been scouting for in-city development opportunities across Mumbai,Delhi and Bengaluru.The high real estate costs in these cities make it a challenging venture and turnkey opportunities such as defunct mills,factory units or shuttered malls are being consi
102、dered.Institutionalization of warehousing segment to accelerate Uninterrupted warehouse park operations have proved to be a key determinant of the strength of an organizations supply chain during the extreme disruptions faced due to the lockdown.Institutional spaces that are backed by warehousing ex
103、pertise that most other players are hard pressed to match were better geared to tackle the exigencies posed by the pandemic and ensure business continuity.Adherence to compliance and modernization of warehousing properties and services are strong trends that are only strengthening with time as more
104、and more occupiers covet the boost in efficiencies that these practices invariably result in.Warehouse lease tenures are getting longer ranging from 6-9 years and even more in some cases,making it an attractive commercial real estate play in the Indian market.Warehouse development demands significan
105、t investment and expertise that institutions are well suited to deliver.We expect that in the current uncertain environment and shrinking margins,institutional abilities will be valued even more and lead to participation of bigger developers and investors in the countrys warehousing segment,especial
106、ly as they have better access to lower-cost capital.Need for warehousing automation increases A host of factors in the evolving warehousing ecosystem will push occupiers to adopt automation for processes such as storage,retrieval and relocation of goods.Operators have been slow to adopt automation i
107、n their warehouses due to the high costs involved,but the disruption in warehouse operations caused by increased throughput requirement of sectors like e-commerce will increase technology adoption going forward.The adoption of automation and other technologies such as warehouse management systems is
108、 still very low in the Indian market compared to developed markets.E-commerce,as a key occupier segment,has been at the forefront of technology adoption in supply chain operations due to its much higher service delivery requirements.However,we expect other segments too will move in this direction le
109、ading to increased capital expenditure on this front from occupiers.Occupiers will consider implementation of technology at the design stage instead of retrofitting as was seen in earlier times.Occupiers looking to SHARE OF SECONDARY MARKETSNote:The secondary market basket comprises 13 markets:Luckn
110、ow,Bhubaneswar,Coimbatore,Ambala-Rajpura Belt,Guwahati,Indore,Jaipur,Ludhiana,Patna,Siliguri,Vadodara,Surat and Vapi.FY 2020FY 2021Warehousing boxes get bigger with increased cargo complexity and throughput requirements The need to manage a large number of SKUs and handle faster movement of cargo ha
111、s been created and accelerated by the sophisticated e-commerce and 3PL occupier groups.Further,with enhanced standards of compliance as well as increased capex within the warehouse facility towards automation,occupiers are preferring larger boxes.In several instances now,the scale of a single wareho
112、use box has been seen to increase from under 100,000 sq ft to over 500,000 sq ft over the last few years.Cost of construction sees a sharp riseThe sharp drop in consumer and industrial demand caused by the lockdowns in early FY 2021 caused raw material prices to plummet,and the subsequent recovery i
113、n global and domestic demand in the later part of the year caused prices of raw materials such as steel and cement to spike.Steel prices have spiked between 36%to 39%YoY across Mumbai,Delhi,Kolkata and Chennai according to the Center for Monitoring Indian Economy(CMIE)in FY 2021.Moreover,labour cost
114、s have also risen substantially during the pandemic.Warehousing being a low margin business,will find it more challenging to cope with the rise in construction cost,especially in a scenario where rents have remained subdued.Management of labour availability during the second wave gets better The fir
115、st lockdown in 2020 had sparked an exodus of labour from cities to their home-towns as they lost their livelihoods and could no longer afford to stay in the cities in an uncertain environment.Their return to the city as the lockdowns eased and normalcy returned was also much delayed causing developm
116、ent activity to be further impeded.As the second wave of infections hit the economy,developers were better prepared and pre-empted another labour exodus by providing them shelter,subsistence wages and other material assurances.Moreover,the lockdown during the second wave was less stringent and const
117、ruction activity was permitted.Nevertheless,some exodus of labour did take place even during the second wave.SHORT-TERM IMPACT AREAS15%23%avoid such capex will increasingly prefer the services of 3PL(Third Party Logistics)operators.Secondary warehousing markets receive further boost in growth The sh
118、are of secondary markets in the total transactions recorded in the country has grown consistently from just 12%in FY 2019 to 23%in FY 2021.The disruption of supply chains in the previous year has only accelerated this trend with consumers being forced to turn to the online marketplace.Secondary mark
119、ets accounted for 0.9 mn sq m(9.7 mn sq ft)of warehousing transactions during the year The fact that transaction volumes in these secondary markets have grown 31%YoY in FY 2021(albeit on a lower base),while the eight prime markets saw demand fall 23%YoY,underscores the increasing traction of these e
120、merging warehousing markets.FY 201912%INDIA WAREHOUSING MARKET REPORT 202178INDIA WAREHOUSING MARKET REPORT 2021I N D I A WA R E H O U S I N GM A R K E T O P P O R T U N I T Yin turn are very highly correlated with the countrys GDP growth.We established this relationship by comparing the progression
121、 of the sales of our seven major occupier groups and the GDP over the FY 2014-2020 period.For this exercise,we used the net sales of 3,754 listed and unlisted companies.Indias GDP growth forecasts were used to estimate sales and transaction activity of these major occupier groups in the top eight In
122、dian cities for the FY 2022-2026 period.The availability and subsequent rollout of vaccines will play a key role in market recovery and determine the speed of recovery.A speedy vaccination drive will help improve demand but current supply side constraints such as the increase in construction costs a
123、nd tight labour conditions are expected to weigh the market down in FY 2022.The market will likely see a more meaningful recovery from FY 2023 onward with the bulk of vaccinations in the country having been completed.The story of modern Indian warehousing is a little over a decade old when logistics
124、 companies such as Future Value chain built the first Grade A warehouses in the country.The entry of institutions,lured by the vast opportunity presented by a growing economy with a consumption base of over 1.3 bn people,made the Indian warehousing market a compelling investment proposition.The intr
125、oduction of the Goods and Services Tax and the prolific growth seen in the e-commerce and 3PL sectors caused warehousing demand to grow at a CAGR of 44%in the FY 2017-2020 period.While the pandemic in FY 2021 has caused demand to drop during the year,the longer-term demand potential for warehousing
126、properties continues to remain strong.However,there is a need to quantify this demand and with this in mind,we have endeavored to estimate the size of the opportunity in the warehousing market over the FY 2022 2026 period.Demand for warehousing properties is an outcome of the business performance of
127、 its constituent occupier groups,which INDIA MARKET SIZING AND PROJECTION FOR 5 YEARSAs India fights the virulent second wave of the pandemic,the warehousing sector is performing a critical role in keeping the logistics sector up and running at this time of crisis.In a vast country like India,which
128、is also one of the worlds major consumption markets,it is imperative for the warehousing sector to be active and make sure that supply chains are not disrupted,hence,all IndoSpace parks are operational during the pandemic in the service of the nation.Due to the advent of the second wave,the growth o
129、f the sector is expected to slow down in the short term.However,we remain bullish on the Indian economy due to its enormous consumption potential which also demands the increasing requirement for storage and warehousing facilities in the long term.As per the recent trends,warehousing companies are o
130、pting for a hub-and-spoke model.A big regional center near a key market acts as a hub warehouse for smaller warehouses.This model will see strong growth in the medium to long term.Due to a greater internet penetration across India,e-commerce companies are also betting big on growth in Tier II and II
131、I locations,which are becoming the preferred warehousing hubs and investment destinations.The demand for Grade A compliant,multi-storey warehouses will see a spike soon in these markets.Same-day delivery guarantees by e-commerce companies,easy return policies,shorter supply chains and the rising pop
132、ularity of daily online orders are some of the factors contributing to this trend.The warehousing industry has also started integrating sustainability into its standard operating procedures.Companies are adopting designs and practices that reduce their carbon footprints and operating costs and shari
133、ng the benefits with customers where possible.In the recent budget,the government announced production-based incentives of$27 billion over the next five years to scale up domestic manufacturing.This too will create economies of scale and provide a conducive manufacturing ecosystem which in turn,will
134、 benefit the warehousing sector in the longer run.Additionally,we see one of the worlds largest vaccination drives as one of the biggest growth drivers for the warehousing industry in India as it will have an ensuing demand for temperature-controlled warehousing facilities for the pharmaceuticals se
135、ctor.Once the second wave starts to recede and the speed of the inoculation programs increases,we expect normalcy to be restored by the second quarter of FY 2022.For now,we have to monitor the situation closely and take actions judiciously.INDIA WAREHOUSING MARKET REPORT 2021Rajesh JaggiVice Chairma
136、n Real Estate,Everstone Group 910INDIA WAREHOUSING MARKET REPORT 2021I N D I A WA R E H O U S I N GM A R K E T O P P O R T U N I T Yin turn are very highly correlated with the countrys GDP growth.We established this relationship by comparing the progression of the sales of our seven major occupier g
137、roups and the GDP over the FY 2014-2020 period.For this exercise,we used the net sales of 3,754 listed and unlisted companies.Indias GDP growth forecasts were used to estimate sales and transaction activity of these major occupier groups in the top eight Indian cities for the FY 2022-2026 period.The
138、 availability and subsequent rollout of vaccines will play a key role in market recovery and determine the speed of recovery.A speedy vaccination drive will help improve demand but current supply side constraints such as the increase in construction costs and tight labour conditions are expected to
139、weigh the market down in FY 2022.The market will likely see a more meaningful recovery from FY 2023 onward with the bulk of vaccinations in the country having been completed.The story of modern Indian warehousing is a little over a decade old when logistics companies such as Future Value chain built
140、 the first Grade A warehouses in the country.The entry of institutions,lured by the vast opportunity presented by a growing economy with a consumption base of over 1.3 bn people,made the Indian warehousing market a compelling investment proposition.The introduction of the Goods and Services Tax and
141、the prolific growth seen in the e-commerce and 3PL sectors caused warehousing demand to grow at a CAGR of 44%in the FY 2017-2020 period.While the pandemic in FY 2021 has caused demand to drop during the year,the longer-term demand potential for warehousing properties continues to remain strong.Howev
142、er,there is a need to quantify this demand and with this in mind,we have endeavored to estimate the size of the opportunity in the warehousing market over the FY 2022 2026 period.Demand for warehousing properties is an outcome of the business performance of its constituent occupier groups,which INDI
143、A MARKET SIZING AND PROJECTION FOR 5 YEARSAs India fights the virulent second wave of the pandemic,the warehousing sector is performing a critical role in keeping the logistics sector up and running at this time of crisis.In a vast country like India,which is also one of the worlds major consumption
144、 markets,it is imperative for the warehousing sector to be active and make sure that supply chains are not disrupted,hence,all IndoSpace parks are operational during the pandemic in the service of the nation.Due to the advent of the second wave,the growth of the sector is expected to slow down in th
145、e short term.However,we remain bullish on the Indian economy due to its enormous consumption potential which also demands the increasing requirement for storage and warehousing facilities in the long term.As per the recent trends,warehousing companies are opting for a hub-and-spoke model.A big regio
146、nal center near a key market acts as a hub warehouse for smaller warehouses.This model will see strong growth in the medium to long term.Due to a greater internet penetration across India,e-commerce companies are also betting big on growth in Tier II and III locations,which are becoming the preferre
147、d warehousing hubs and investment destinations.The demand for Grade A compliant,multi-storey warehouses will see a spike soon in these markets.Same-day delivery guarantees by e-commerce companies,easy return policies,shorter supply chains and the rising popularity of daily online orders are some of
148、the factors contributing to this trend.The warehousing industry has also started integrating sustainability into its standard operating procedures.Companies are adopting designs and practices that reduce their carbon footprints and operating costs and sharing the benefits with customers where possib
149、le.In the recent budget,the government announced production-based incentives of$27 billion over the next five years to scale up domestic manufacturing.This too will create economies of scale and provide a conducive manufacturing ecosystem which in turn,will benefit the warehousing sector in the long
150、er run.Additionally,we see one of the worlds largest vaccination drives as one of the biggest growth drivers for the warehousing industry in India as it will have an ensuing demand for temperature-controlled warehousing facilities for the pharmaceuticals sector.Once the second wave starts to recede
151、and the speed of the inoculation programs increases,we expect normalcy to be restored by the second quarter of FY 2022.For now,we have to monitor the situation closely and take actions judiciously.INDIA WAREHOUSING MARKET REPORT 2021Rajesh JaggiVice Chairman Real Estate,Everstone Group 910INDIA WARE
152、HOUSING MARKET REPORT 2021ESTIMATED GROWTH STATISTICS BY SECTOR Sector Transactions Transactions Change FY 2017-2021 FY 2022-2026 mn sq m(mn sq ft)mn sq m(mn sq ft)Source:Knight Frank ResearchNotes:Warehousing demand data includes light manufacturing/assembling.Other Sectors include all manufacturin
153、g sectors(automobile,electronics,pharmaceutical,etc.)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document management,agricultural warehousing and publishing.E-commerce 3.4(37)9.1(98)165%3PL 4.9(53)7.7(83)56%Other Sectors 3.4(37)4.9(53)43%FMCD 0.7(8)0.
154、9(9)20%FMCG 0.8(8)0.9(10)15%Retail 1.4(15)1.5(16)7%Miscellaneous 0.4(4)0.4(4)1%Total 15.1(162)25.4(273)68%INDIA WAREHOUSING MARKET REPORT 2021As per our projection,annual transactions will grow at a CAGR of 19%to 7.08 mn sq m(76.2 mn sq ft)in FY 2026 from 2.95 mn sq m(31.7 mn sq ft)in FY 2021.The e-
155、commerce sector will drive bulk of the volume,as the accelerated growth trajectory that the pandemic pushed the sector toward is expected to sustain.Most consumers that were forced to shop online will continue to do so and the existing brick-and-mortar stores will also look to leverage online channe
156、ls to push sales.The 3PL sector will sustain market share as e-commerce and other sectors increasingly outsource their warehousing requirements to specialists in the field.TOTAL WAREHOUSING TRANSACTIONS ACROSS THE 8 PRIMARY MARKETS4 year CAGR:23%1.292.957.085 year CAGR:19%Source:Knight Frank Researc
157、hNotes:8 primary markets include NCR,Mumbai,Pune,Bengaluru,Chennai,Hyderabad,Kolkata,Ahmedabad.FY 2026P denotes the projected transaction volumes in FY 2026.FY 2017FY 2021FY 2026PIndustrial demand accounted for 15%of the space transacted during FY 2021,the bulk of which is taken up by Other Sectors
158、such as automobile,pharmaceutical,cement and steel.The Indian governments focus on manufacturing with the Make in India initiative and Production Linked Incentive(PLI)scheme among others,and with India being among the possible beneficiaries of global companies looking to disperse manufacturing capac
159、ity from China across Asia,should enable warehousing demand from Other Sectors to grow at a CAGR of 16%in the next five years compared to 15%in the preceding period.EXISTING AND PROJECTED SECTOR SPLIT OF WAREHOUSE DEMANDSource:Knight Frank ResearchNotes:Warehousing demand data includes light manufac
160、turing/assembling.Other Sectors include all manufacturing sectors(automobile,electronics,pharmaceutical,etc)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document management,agricultural warehousing and publishing.E-commerceOther Sectors3PLFMCDFMCGRetai
161、lMiscellaneousFY 2021FY 2026P31%31%23%5%5%4%1%30%37%20%6%3%3%1%It is estimated that the e-commerce sector will consume the most space in the next five year block of FY 2022-2026 at 9.1 mn sq m(98 mn sq ft),165%more than the preceding period of FY 2017-2021.Similarly,3PL and Other Sector companies ar
162、e expected to take up 56%and 43%more space in the next five years compared to the preceding period.These three occupier groups are expected to account for 86%of the total transacted space in the next five years compared to 78%of the transacted space earlier.1 112INDIA WAREHOUSING MARKET REPORT 2021E
163、STIMATED GROWTH STATISTICS BY SECTOR Sector Transactions Transactions Change FY 2017-2021 FY 2022-2026 mn sq m(mn sq ft)mn sq m(mn sq ft)Source:Knight Frank ResearchNotes:Warehousing demand data includes light manufacturing/assembling.Other Sectors include all manufacturing sectors(automobile,electr
164、onics,pharmaceutical,etc.)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document management,agricultural warehousing and publishing.E-commerce 3.4(37)9.1(98)165%3PL 4.9(53)7.7(83)56%Other Sectors 3.4(37)4.9(53)43%FMCD 0.7(8)0.9(9)20%FMCG 0.8(8)0.9(10)15
165、%Retail 1.4(15)1.5(16)7%Miscellaneous 0.4(4)0.4(4)1%Total 15.1(162)25.4(273)68%INDIA WAREHOUSING MARKET REPORT 2021As per our projection,annual transactions will grow at a CAGR of 19%to 7.08 mn sq m(76.2 mn sq ft)in FY 2026 from 2.95 mn sq m(31.7 mn sq ft)in FY 2021.The e-commerce sector will drive
166、bulk of the volume,as the accelerated growth trajectory that the pandemic pushed the sector toward is expected to sustain.Most consumers that were forced to shop online will continue to do so and the existing brick-and-mortar stores will also look to leverage online channels to push sales.The 3PL se
167、ctor will sustain market share as e-commerce and other sectors increasingly outsource their warehousing requirements to specialists in the field.TOTAL WAREHOUSING TRANSACTIONS ACROSS THE 8 PRIMARY MARKETS4 year CAGR:23%1.292.957.085 year CAGR:19%Source:Knight Frank ResearchNotes:8 primary markets in
168、clude NCR,Mumbai,Pune,Bengaluru,Chennai,Hyderabad,Kolkata,Ahmedabad.FY 2026P denotes the projected transaction volumes in FY 2026.FY 2017FY 2021FY 2026PIndustrial demand accounted for 15%of the space transacted during FY 2021,the bulk of which is taken up by Other Sectors such as automobile,pharmace
169、utical,cement and steel.The Indian governments focus on manufacturing with the Make in India initiative and Production Linked Incentive(PLI)scheme among others,and with India being among the possible beneficiaries of global companies looking to disperse manufacturing capacity from China across Asia,
170、should enable warehousing demand from Other Sectors to grow at a CAGR of 16%in the next five years compared to 15%in the preceding period.EXISTING AND PROJECTED SECTOR SPLIT OF WAREHOUSE DEMANDSource:Knight Frank ResearchNotes:Warehousing demand data includes light manufacturing/assembling.Other Sec
171、tors include all manufacturing sectors(automobile,electronics,pharmaceutical,etc)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document management,agricultural warehousing and publishing.E-commerceOther Sectors3PLFMCDFMCGRetailMiscellaneousFY 2021FY 202
172、6P31%31%23%5%5%4%1%30%37%20%6%3%3%1%It is estimated that the e-commerce sector will consume the most space in the next five year block of FY 2022-2026 at 9.1 mn sq m(98 mn sq ft),165%more than the preceding period of FY 2017-2021.Similarly,3PL and Other Sector companies are expected to take up 56%an
173、d 43%more space in the next five years compared to the preceding period.These three occupier groups are expected to account for 86%of the total transacted space in the next five years compared to 78%of the transacted space earlier.1 112INDIA WAREHOUSING MARKET REPORT 2021MARKET POTENTIAL:COMPARING I
174、NDIAN WAREHOUSING MARKET WITH OTHER COUNTRIESIndian warehousing is still at a very nascent stage and has a long way to go before tapping into its full potential.One of the ways to gauge the scale of the opportunity the Indian warehousing market represents would be to compare the area of industrial a
175、nd warehousing stock present in developed markets,where the warehousing market is more mature.The growth of a warehousing market is highly correlated with the population and per capita income of a country and is depicted in the adjacent table as well.India has a per capita warehousing stock of just
176、0.02 sq m compared to the USA,China and the United Kingdom that have 4.4 sq m,0.8 sq m and 1.09 sq m respectively.Even in terms of transaction volumes,USAs industrial and warehousing market saw 20.4 mn sq m(220 mn sq ft)transacted during 2020,7 times that of India in FY 2021.The e-commerce sector ha
177、s been the biggest driver of warehousing across developed markets globally.The share of online sales in the UK had in fact spiked from 19.2%in 2019 to a steep 33.4%in May 2020 showing the dominance and scalability of the online marketplace even in a mature market.With only 4.7%penetration in India(2
178、019 est),we believe that the Indian e-commerce market is on the cusp of its next phase of growth with Indian business giants such as the Reliance and Tata groups entering the fray along with global behemoths Amazon and Walmart to capture this massive market.A growing economy like India with the seco
179、nd largest population in the world still holds massive potential for its warehousing market which will fructify over the next few years.COMPARISON OF WAREHOUSING MARKETS United States of America(USA)GDP Constant Prices(USD tn):18.3Population(mn):328GDP Per Capita(USD):55,753Warehousing Stock(mn sq m
180、):1,446Warehousing Stock Per Capita(sq m):4.4Source:World Bank,China Logistics Research Association,Knight Frank ResearchNotes:Warehousing stock per capita=Warehousing stock/total populationIndia represents the top eight cities.It includes commercial warehouses but excludes agri-warehouses.United Ki
181、ngdomGDP Constant Prices(USD tn):2.9Population(mn):6.7GDP Per Capita(USD):43,710Warehousing Stock(mn sq m):73Warehousing Stock Per Capita(sq m):1.09ChinaGDP Constant Prices(USD tn):11.5Population(mn):1,397GDP Per Capita(USD):8,242Warehousing Stock(mn sq m):1,060Warehousing Stock Per Capita(sq m):0.8
182、IndiaGDP Constant Prices(USD tn):2.9Population(mn):1,366GDP Per Capita(USD):2,152Warehousing Stock(mn sq m):30.9Warehousing Stock Per Capita(sq m):0.02The warehousing sector witnessed substantial leasing growth in the past year due to robust demand from leading e-commerce players,followed by FMCG an
183、d cold storage companies.However,challenges such as limited availability of debt,increased material cost,lack of availability of labour,inconsistent supply of construction materials slowed down construction progress.The second wave has further decelerated construction activities and delayed leasing
184、closures.The slowdown in construction would lead to an incremental increase in demand for ready buildings at strategic locations from domestic and international companies wanting to set up or expand their operations.ESR has developed a substantial portfolio of ready assets across the country to addr
185、ess this demand.We foresee an increase in demand from e-commerce companies as they strengthen their positions in Tier 1 markets and boost their in-city distribution network.3PL enquiries were on the rise towards the end of the first wave,which has slowed down.Demand for industrial spaces is also wit
186、nessing a gradual increase and is likely to surge in the long term due to the rise in global interest to invest in India.Tier 2 cities will be crucial for the next phase of e-commerce expansion,and institutional developers are expanding their footprint in key markets to address this demand.There wil
187、l be renewed interest in digitisation,automation to conduct contactless business processes,and the shift from Grade B to Grade A spaces will continue.Implementation of construction technology will help increase efficiency and reduce turnaround time for delivery.Currently,the market is in a wait&watc
188、h mode,and it will take 6-7 months to see how the sector regains its velocity and bounces back with renewed vigour.INDIA WAREHOUSING MARKET REPORT 2021Abhijit MalkaniCEO at ESR Advisers India1314INDIA WAREHOUSING MARKET REPORT 2021MARKET POTENTIAL:COMPARING INDIAN WAREHOUSING MARKET WITH OTHER COUNT
189、RIESIndian warehousing is still at a very nascent stage and has a long way to go before tapping into its full potential.One of the ways to gauge the scale of the opportunity the Indian warehousing market represents would be to compare the area of industrial and warehousing stock present in developed
190、 markets,where the warehousing market is more mature.The growth of a warehousing market is highly correlated with the population and per capita income of a country and is depicted in the adjacent table as well.India has a per capita warehousing stock of just 0.02 sq m compared to the USA,China and t
191、he United Kingdom that have 4.4 sq m,0.8 sq m and 1.09 sq m respectively.Even in terms of transaction volumes,USAs industrial and warehousing market saw 20.4 mn sq m(220 mn sq ft)transacted during 2020,7 times that of India in FY 2021.The e-commerce sector has been the biggest driver of warehousing
192、across developed markets globally.The share of online sales in the UK had in fact spiked from 19.2%in 2019 to a steep 33.4%in May 2020 showing the dominance and scalability of the online marketplace even in a mature market.With only 4.7%penetration in India(2019 est),we believe that the Indian e-com
193、merce market is on the cusp of its next phase of growth with Indian business giants such as the Reliance and Tata groups entering the fray along with global behemoths Amazon and Walmart to capture this massive market.A growing economy like India with the second largest population in the world still
194、holds massive potential for its warehousing market which will fructify over the next few years.COMPARISON OF WAREHOUSING MARKETS United States of America(USA)GDP Constant Prices(USD tn):18.3Population(mn):328GDP Per Capita(USD):55,753Warehousing Stock(mn sq m):1,446Warehousing Stock Per Capita(sq m)
195、:4.4Source:World Bank,China Logistics Research Association,Knight Frank ResearchNotes:Warehousing stock per capita=Warehousing stock/total populationIndia represents the top eight cities.It includes commercial warehouses but excludes agri-warehouses.United KingdomGDP Constant Prices(USD tn):2.9Popul
196、ation(mn):6.7GDP Per Capita(USD):43,710Warehousing Stock(mn sq m):73Warehousing Stock Per Capita(sq m):1.09ChinaGDP Constant Prices(USD tn):11.5Population(mn):1,397GDP Per Capita(USD):8,242Warehousing Stock(mn sq m):1,060Warehousing Stock Per Capita(sq m):0.8IndiaGDP Constant Prices(USD tn):2.9Popul
197、ation(mn):1,366GDP Per Capita(USD):2,152Warehousing Stock(mn sq m):30.9Warehousing Stock Per Capita(sq m):0.02The warehousing sector witnessed substantial leasing growth in the past year due to robust demand from leading e-commerce players,followed by FMCG and cold storage companies.However,challeng
198、es such as limited availability of debt,increased material cost,lack of availability of labour,inconsistent supply of construction materials slowed down construction progress.The second wave has further decelerated construction activities and delayed leasing closures.The slowdown in construction wou
199、ld lead to an incremental increase in demand for ready buildings at strategic locations from domestic and international companies wanting to set up or expand their operations.ESR has developed a substantial portfolio of ready assets across the country to address this demand.We foresee an increase in
200、 demand from e-commerce companies as they strengthen their positions in Tier 1 markets and boost their in-city distribution network.3PL enquiries were on the rise towards the end of the first wave,which has slowed down.Demand for industrial spaces is also witnessing a gradual increase and is likely
201、to surge in the long term due to the rise in global interest to invest in India.Tier 2 cities will be crucial for the next phase of e-commerce expansion,and institutional developers are expanding their footprint in key markets to address this demand.There will be renewed interest in digitisation,aut
202、omation to conduct contactless business processes,and the shift from Grade B to Grade A spaces will continue.Implementation of construction technology will help increase efficiency and reduce turnaround time for delivery.Currently,the market is in a wait&watch mode,and it will take 6-7 months to see
203、 how the sector regains its velocity and bounces back with renewed vigour.INDIA WAREHOUSING MARKET REPORT 2021Abhijit MalkaniCEO at ESR Advisers India1314INDIA WAREHOUSING MARKET REPORT 2021INDIA WAREHOUSING MARKET REPORT 202105INDIA WAREHOUSING MARKET REPORT 2021WA R E H O U S I N GM A R K E T A N
204、A LY S I SSupply was similarly impacted due to the near complete stoppage of any development activity as the migrant labour-force had returned to their hometowns.The relatively limited supply of Grade A warehouses in the right locations was also a contributing factor to subdued transaction levels in
205、 FY 2021,especially in Mumbai.The slowdown in market traction,while expected,is markedly less drastic than seen in other real estate segments like office and retail.It is also noteworthy that despite the significant YoY fall in transaction volumes in FY 2021,demand has grown at a CAGR of 23%in the F
206、Y 2017-2021 period.While warehouses remain an attractive investment grade real estate asset class in India,economic sluggishness since FY 2020 and the second wave of the pandemic in FY 2021 have had an adverse impact on occupier demand.The lockdown imposed during Q1 FY 2021 brought economic activity
207、 to a near halt during the quarter and impacted consumer sentiments for the remainder of the year.The threat of disruption in sales caused potential occupiers to curtail non-core expenses and defer expansion plans of current capacities,causing transaction activity to drop 23%YoY in FY 2021.This drop
208、 in demand also caused rents to decline across most markets.ANNUAL DEMAND ANALYSIS MARKET AND SECTOR SPLITANNUAL WAREHOUSING TRANSACTIONSSource:Knight Frank ResearchWarehousing leasing FY 2021 Change CAGRCity in mn sq m(mn sq ft)FY 2021 YoY FY 2017-2021NCR 0.6(6.9)-20%25%Mumbai 0.5(5.8)-23%39%Bangal
209、ore 0.4(4.3)0%35%Chennai 0.3(3.5)4%17%Kolkata 0.3(3.1)-22%23%Ahmedabad 0.3(3)-42%14%Pune 0.3(2.8)-42%9%Hyderabad 0.2(2.4)-30%18%Total 2.9(31.7)-23%23%While transaction volumes were subdued in FY 2021,occupiers showed a marked preference for Grade A properties as they are much better geared toward ta
210、ckling exigencies such as those posed by the pandemic.The inherent operational efficiencies,adherence to safety standards and better contingency planning as a result of greater expertise of personnel due to higher institutional participation are some of the factors that drew occupier interest even d
211、uring the challenging environment of FY 2021.E-commerce players have always coveted the value additions that Grade A properties bring in to their supply chain operations and the increase in their share of total transaction volumes also had a significant role to play in the increased take-up seen in
212、Grade A properties.64%of the area transacted during FY 2021 was located in Grade A properties.With the exception of Bengaluru and Ahmedabad,more than half the area transacted in all the top markets occurred in Grade A properties.AVERAGE RENTSSource:Knight Frank Research FY 2020 FY 2021 Markets INR/s
213、q m/month INR/sq m/month YoY (INR/sq ft/month)(INR/sq ft/month)ChangeMumbai 235(21.9)218(20.2)-7%Bangalore 212(19.7)202(18.8)-5%Ahmedabad 171(15.9)167(15.5)-3%Chennai 235(21.8)229(21.3)-3%Hyderabad 214(19.9)210(19.5)-2%Kolkata 223(20.8)221(20.6)-1%Pune 249(23.1)248(23)-1%NCR 191(17.7)193(17.9)1%Rent
214、 growth faced significant headwinds in the challenging market with occupiers negotiating hard for incentives like rent-free periods and delaying contractual escalations to tide over liquidity issues.Resistance to rent growth,coupled with the recent increase in construction cost due to the sharp incr
215、ease in prices of cement,steel and labour have created significant hurdles for further warehouse development.However,this deadlock could break toward the end of the current year as occupiers eventually submit to higher rents due to the inflationary pressures.The social distancing norms that were imp
216、osed due to the pandemic have impacted every physical marketplace.This caused the already high-growth e-commerce sector to receive a further boost,especially in the essential categories like grocery and pharmaceuticals.This was reflected in the sectors share in annual transactions which increased 8
217、percentage points from 23%to 31%.The share of 3PL operators had been growing steadily,fuelled by the increasing need for e-commerce logistics as well as a strengthening trend of most companies outsourcing their logistics requirements to 3PL operators.However,the share of the 3PL industry fell to 31%
218、in FY 2021 from 35%previously as its fortunes are closely linked to those of all other sectors ranging from manufacturing to retail,with e-commerce accounting for approximately 10-20%of its incremental demand.The e-commerce and 3PL sectors continued to dominate the transactions pie,accounting for 63
219、%of the transactions during the year.15%of the volumes transacted during FY 2021 were purely for industrial use i.e.their end-use involved some form of manufacturing activity from sectors like automobile,FMCG and FMCD.Among the top eight markets in India-Pune,Chennai and Ahmedabad are cities with 15
220、16INDIA WAREHOUSING MARKET REPORT 2021INDIA WAREHOUSING MARKET REPORT 202105INDIA WAREHOUSING MARKET REPORT 2021WA R E H O U S I N GM A R K E T A N A LY S I SSupply was similarly impacted due to the near complete stoppage of any development activity as the migrant labour-force had returned to their
221、hometowns.The relatively limited supply of Grade A warehouses in the right locations was also a contributing factor to subdued transaction levels in FY 2021,especially in Mumbai.The slowdown in market traction,while expected,is markedly less drastic than seen in other real estate segments like offic
222、e and retail.It is also noteworthy that despite the significant YoY fall in transaction volumes in FY 2021,demand has grown at a CAGR of 23%in the FY 2017-2021 period.While warehouses remain an attractive investment grade real estate asset class in India,economic sluggishness since FY 2020 and the s
223、econd wave of the pandemic in FY 2021 have had an adverse impact on occupier demand.The lockdown imposed during Q1 FY 2021 brought economic activity to a near halt during the quarter and impacted consumer sentiments for the remainder of the year.The threat of disruption in sales caused potential occ
224、upiers to curtail non-core expenses and defer expansion plans of current capacities,causing transaction activity to drop 23%YoY in FY 2021.This drop in demand also caused rents to decline across most markets.ANNUAL DEMAND ANALYSIS MARKET AND SECTOR SPLITANNUAL WAREHOUSING TRANSACTIONSSource:Knight F
225、rank ResearchWarehousing leasing FY 2021 Change CAGRCity in mn sq m(mn sq ft)FY 2021 YoY FY 2017-2021NCR 0.6(6.9)-20%25%Mumbai 0.5(5.8)-23%39%Bangalore 0.4(4.3)0%35%Chennai 0.3(3.5)4%17%Kolkata 0.3(3.1)-22%23%Ahmedabad 0.3(3)-42%14%Pune 0.3(2.8)-42%9%Hyderabad 0.2(2.4)-30%18%Total 2.9(31.7)-23%23%Wh
226、ile transaction volumes were subdued in FY 2021,occupiers showed a marked preference for Grade A properties as they are much better geared toward tackling exigencies such as those posed by the pandemic.The inherent operational efficiencies,adherence to safety standards and better contingency plannin
227、g as a result of greater expertise of personnel due to higher institutional participation are some of the factors that drew occupier interest even during the challenging environment of FY 2021.E-commerce players have always coveted the value additions that Grade A properties bring in to their supply
228、 chain operations and the increase in their share of total transaction volumes also had a significant role to play in the increased take-up seen in Grade A properties.64%of the area transacted during FY 2021 was located in Grade A properties.With the exception of Bengaluru and Ahmedabad,more than ha
229、lf the area transacted in all the top markets occurred in Grade A properties.AVERAGE RENTSSource:Knight Frank Research FY 2020 FY 2021 Markets INR/sq m/month INR/sq m/month YoY (INR/sq ft/month)(INR/sq ft/month)ChangeMumbai 235(21.9)218(20.2)-7%Bangalore 212(19.7)202(18.8)-5%Ahmedabad 171(15.9)167(1
230、5.5)-3%Chennai 235(21.8)229(21.3)-3%Hyderabad 214(19.9)210(19.5)-2%Kolkata 223(20.8)221(20.6)-1%Pune 249(23.1)248(23)-1%NCR 191(17.7)193(17.9)1%Rent growth faced significant headwinds in the challenging market with occupiers negotiating hard for incentives like rent-free periods and delaying contrac
231、tual escalations to tide over liquidity issues.Resistance to rent growth,coupled with the recent increase in construction cost due to the sharp increase in prices of cement,steel and labour have created significant hurdles for further warehouse development.However,this deadlock could break toward th
232、e end of the current year as occupiers eventually submit to higher rents due to the inflationary pressures.The social distancing norms that were imposed due to the pandemic have impacted every physical marketplace.This caused the already high-growth e-commerce sector to receive a further boost,espec
233、ially in the essential categories like grocery and pharmaceuticals.This was reflected in the sectors share in annual transactions which increased 8 percentage points from 23%to 31%.The share of 3PL operators had been growing steadily,fuelled by the increasing need for e-commerce logistics as well as
234、 a strengthening trend of most companies outsourcing their logistics requirements to 3PL operators.However,the share of the 3PL industry fell to 31%in FY 2021 from 35%previously as its fortunes are closely linked to those of all other sectors ranging from manufacturing to retail,with e-commerce acco
235、unting for approximately 10-20%of its incremental demand.The e-commerce and 3PL sectors continued to dominate the transactions pie,accounting for 63%of the transactions during the year.15%of the volumes transacted during FY 2021 were purely for industrial use i.e.their end-use involved some form of
236、manufacturing activity from sectors like automobile,FMCG and FMCD.Among the top eight markets in India-Pune,Chennai and Ahmedabad are cities with 1516INDIA WAREHOUSING MARKET REPORT 2021Sushil RathiChief Operating Officer MLL Transportation&Procurement&Chief Executive Officer Lords Freight Limited I
237、NDIA WAREHOUSING MARKET REPORT 2021a significant industrial base.The market for industrial-use properties is expected to gain traction gradually as the governments focus on increasing Indias manufacturing heft starts to pay dividends.While measures such as the Make in India campaign and the Producti
238、on Linked Incentive scheme have only now begun to show some promise,the comparatively lengthy clearance processes and a relatively difficult financing environment reduce Indias competitiveness as a manufacturing destination.SECTOR-WISE SHARE OF TRANSACTIONS TRANSACTION SHARE BY END-USE OF SPACESourc
239、e:Knight Frank ResearchNotes:Warehousing demand data includes light manufacturing/assembling.Other Sectors include all manufacturing sectors(automobile,electronics,pharmaceutical,etc.)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document management,agr
240、icultural warehousing and publishing.Source:Knight Frank ResearchNotes:Warehousing transactions refer to storage activity Industrial transactions refer to manufacturing activityIndustrialWarehousing85%15%The Indian warehousing industry is currently at a crucial point that will not only make it one o
241、f the biggest but also one of the smartest across the globe.Post GST,we have seen a whole lot of consolidation exercises taken up by OEMs.Now with the government policies to boost India as an emerging global manufacturing hub,e-commerce boom accelerated by the Covid-19 pandemic and the rise of Tier
242、2 and 3 cities as consumption centres,we are likely to see major growth for quality warehousing space.Two things stand out for the future,one is compliant warehouses and the other is Grade A specifications.The warehousing and logistics asset class could be among the fastest to recover from the coron
243、avirus crisis,with an expected increase in domestic demand and the possibility of global firms shifting manufacturing to India to de-risk their global supply chains having an overdependence on China.Going forward,we foresee an increased adoption of large format,multiuser and compliant warehouses.We
244、also anticipate a higher level of automation in warehousing operations.At Mahindra Logistics,we foresee our current warehousing footprint of 17 million sq ft to double in the next 3 years.We see demand growing not only in Tier 1 cities but spreading to Tier 2 and 3 cities already.Customers are looki
245、ng to contract 3PL service providers who can offer pan India footprints coupled with distribution capabilities.17183PLFY 2018:35%FY 2019:36%FY 2020:35%FY 2021:31%E-COMMERCEFY 2018:14%FY 2019:24%FY 2020:23%FY 2021:31%FMCDFY 2018:6%FY 2019:3%FY 2020:4%FY 2021:5%FMCGFY 2018:7%FY 2019:4%FY 2020:4%FY 202
246、1:5%RETAILFY 2018:12%FY 2019:11%FY 2020:8%FY 2021:4%OTHER SECTORSFY 2018:21%FY 2019:21%FY 2020:23%FY 2021:23%MISCELLANEOUSFY 2018:4%FY 2019:1%FY 2020:4%FY 2021:1%INDIA WAREHOUSING MARKET REPORT 2021Sushil RathiChief Operating Officer MLL Transportation&Procurement&Chief Executive Officer Lords Freig
247、ht Limited INDIA WAREHOUSING MARKET REPORT 2021a significant industrial base.The market for industrial-use properties is expected to gain traction gradually as the governments focus on increasing Indias manufacturing heft starts to pay dividends.While measures such as the Make in India campaign and
248、the Production Linked Incentive scheme have only now begun to show some promise,the comparatively lengthy clearance processes and a relatively difficult financing environment reduce Indias competitiveness as a manufacturing destination.SECTOR-WISE SHARE OF TRANSACTIONS TRANSACTION SHARE BY END-USE O
249、F SPACESource:Knight Frank ResearchNotes:Warehousing demand data includes light manufacturing/assembling.Other Sectors include all manufacturing sectors(automobile,electronics,pharmaceutical,etc.)excluding FMCG and FMCD.Miscellaneous category includes services such as telecom,real estate,document ma
250、nagement,agricultural warehousing and publishing.Source:Knight Frank ResearchNotes:Warehousing transactions refer to storage activity Industrial transactions refer to manufacturing activityIndustrialWarehousing85%15%The Indian warehousing industry is currently at a crucial point that will not only m
251、ake it one of the biggest but also one of the smartest across the globe.Post GST,we have seen a whole lot of consolidation exercises taken up by OEMs.Now with the government policies to boost India as an emerging global manufacturing hub,e-commerce boom accelerated by the Covid-19 pandemic and the r
252、ise of Tier 2 and 3 cities as consumption centres,we are likely to see major growth for quality warehousing space.Two things stand out for the future,one is compliant warehouses and the other is Grade A specifications.The warehousing and logistics asset class could be among the fastest to recover fr
253、om the coronavirus crisis,with an expected increase in domestic demand and the possibility of global firms shifting manufacturing to India to de-risk their global supply chains having an overdependence on China.Going forward,we foresee an increased adoption of large format,multiuser and compliant wa
254、rehouses.We also anticipate a higher level of automation in warehousing operations.At Mahindra Logistics,we foresee our current warehousing footprint of 17 million sq ft to double in the next 3 years.We see demand growing not only in Tier 1 cities but spreading to Tier 2 and 3 cities already.Custome
255、rs are looking to contract 3PL service providers who can offer pan India footprints coupled with distribution capabilities.17183PLFY 2018:35%FY 2019:36%FY 2020:35%FY 2021:31%E-COMMERCEFY 2018:14%FY 2019:24%FY 2020:23%FY 2021:31%FMCDFY 2018:6%FY 2019:3%FY 2020:4%FY 2021:5%FMCGFY 2018:7%FY 2019:4%FY 2
256、020:4%FY 2021:5%RETAILFY 2018:12%FY 2019:11%FY 2020:8%FY 2021:4%OTHER SECTORSFY 2018:21%FY 2019:21%FY 2020:23%FY 2021:23%MISCELLANEOUSFY 2018:4%FY 2019:1%FY 2020:4%FY 2021:1%INDIA WAREHOUSING MARKET REPORT 2021The development of Grade A warehousing facilities has been increasing in recent years,curr
257、ently constituting 35%of the total stock compared to 34%in FY 2020.The larger warehousing markets of Mumbai and NCR have a significantly lower proportion of Grade A warehouses as they are much older markets and a bulk of their stock had been built before the demand for Grade A warehousing gathered m
258、omentum.Pune and Chennai have the highest concentration of Grade A stock due to their primary demand base of auto and auto ancillary occupiers.Notably,Mumbai,NCR,Bengaluru and Ahmedabad have more than a 50%share of Grade B properties.Interestingly,despite having a high proportion(82%)of Grade B stoc
259、k,the fact that Mumbai still enjoys market level occupancy of close to 87%underscores the strength of the market and need for quality supply.Vacancy in Grade A properties is significantly less than the total vacancy for the eight primary markets under coverage.In fact,Grade A vacancy has also reduce
260、d or stayed the same YoY for all markets except Ahmedabad which saw a significant speculative development during FY 2021.More than$6.5 bn have been committed by private equity players in the warehousing market since the GST reforms were applied in 2017.However,the relative dearth of supply of high q
261、uality warehousing facilities that conforms to contemporary compliance norms,continues to be a challenge.The availability of suitable land is the biggest impediment in creating supply as lands with clear title continue to be scarce and digitisation of land records which can address this issue is sti
262、ll a long way from becoming a reality.Bhiwandi and the Nashik Highway in the Mumbai market are a case in point where there is very strong occupier demand but issues with land titling curtail institutional interest.Additionally,persistently high land prices and the complexity and time taken for acqui
263、ring regulatory approvals continue to impact the viability of warehouse projects and are significant impediments in creating warehousing capacity.Market traction was seen improving toward the end of FY 2021 as vaccine availability improved and occupiers looked to revive expansion plans.However,the s
264、econd wave of COVID-19 infections in FY 2021 have again slowed the momentum.Occupier activity in FY 2022 will clearly be dictated by the intensity of the pandemic and should regain lost momentum as vaccine deployment improves and restores normalcy to economic activity.INDIA WAREHOUSING MARKET REPORT
265、 2021STOCK AND SUPPLY DEVELOPMENT POTENTIAL ASSESSMENTKnight Frank has conducted a ground-up survey of warehousing stock in the top eight markets of India to arrive at an assessment of the supply scenario that exists in the market today.The eight primary markets of India held an estimated 31 mn sq m
266、(329 mn sq ft)of warehousing stock at the end of FY 2021.The Mumbai market accounts for 42%of this stock and along with NCR accounts for 60%of the total stock.The vacancy levels in the Mumbai and NCR markets are relatively low and their high weightage in the total stock keeps the combined vacancy le
267、vel of all eight cities at a comparatively healthy 16.6%.However,the vacancy level has moved up by 130 basis points YoY in FY 2021 due to weaker transaction activity during the year.WAREHOUSING STOCK AND VACANCYMarket Existing Stock Vacancy Vacancy mn sq m(mn sq ft)FY 2020 FY 2021Mumbai 12.7(137)11.
268、6%13.3%NCR 5.5(59)13.9%15.8%Pune 2.4(26)21.8%21.8%Chennai 2.3(25)14.7%13.1%Kolkata 2.1(23)20.6%21.5%Bengaluru 2.1(23)26.2%25.2%Ahmedabad 2(21)13.2%22.8%Hyderabad 1.4(15)22.4%18.9%Total 30.6(329)15.3%16.6%Source:Knight Frank ResearchWe estimate that the total land committed to warehousing development
269、 amounts to 22,488 acres in the top eight markets and translates to a total buildable potential of almost 49 mn sq m(531 mn sq ft),after factoring in property level FSI dynamics.Given that 31 mn sq m(329 mn sq ft)of warehousing stock already exists on this committed land,this leaves nearly 19 mn sq
270、m(202 mn sq ft)of potential warehousing space that can come up on these warehousing land parcels.The eight markets can potentially add 61%more to the warehousing stock currently operational there,so they are said to have a total development potential multiple of 1.61.Compared to other property types
271、,warehousing development takes relatively less time.A high-quality PEB warehousing facility can be fully developed from the ground-up within a period of one year,depending on the extent of treatment such as filling and levelling that the land requires.STOCK SPLIT BY GRADESource:Knight Frank Research
272、Market Grade A Grade BPune 71%29%Chennai 71%29%Hyderabad 56%44%Kolkata 56%44%Bengaluru 42%58%Ahmedabad 30%70%NCR 29%71%Mumbai 18%82%Total 35%65%VACANCY SPLIT BY GRADEMarket Grade A Grade B TotalBengaluru 9.4%36.9%25.2%Chennai 11.2%17.4%13.1%Hyderabad 12.4%27.1%18.9%Kolkata 12.7%32.6%21.5%Mumbai 13.3
273、%13.3%13.3%Pune 14.3%40.3%21.8%NCR 22.5%13.1%15.8%Ahmedabad 32.6%18.6%22.8%Total 15.1%17.5%16.6%1920Source:Knight Frank ResearchINDIA WAREHOUSING MARKET REPORT 2021The development of Grade A warehousing facilities has been increasing in recent years,currently constituting 35%of the total stock compa
274、red to 34%in FY 2020.The larger warehousing markets of Mumbai and NCR have a significantly lower proportion of Grade A warehouses as they are much older markets and a bulk of their stock had been built before the demand for Grade A warehousing gathered momentum.Pune and Chennai have the highest conc
275、entration of Grade A stock due to their primary demand base of auto and auto ancillary occupiers.Notably,Mumbai,NCR,Bengaluru and Ahmedabad have more than a 50%share of Grade B properties.Interestingly,despite having a high proportion(82%)of Grade B stock,the fact that Mumbai still enjoys market lev
276、el occupancy of close to 87%underscores the strength of the market and need for quality supply.Vacancy in Grade A properties is significantly less than the total vacancy for the eight primary markets under coverage.In fact,Grade A vacancy has also reduced or stayed the same YoY for all markets excep
277、t Ahmedabad which saw a significant speculative development during FY 2021.More than$6.5 bn have been committed by private equity players in the warehousing market since the GST reforms were applied in 2017.However,the relative dearth of supply of high quality warehousing facilities that conforms to
278、 contemporary compliance norms,continues to be a challenge.The availability of suitable land is the biggest impediment in creating supply as lands with clear title continue to be scarce and digitisation of land records which can address this issue is still a long way from becoming a reality.Bhiwandi
279、 and the Nashik Highway in the Mumbai market are a case in point where there is very strong occupier demand but issues with land titling curtail institutional interest.Additionally,persistently high land prices and the complexity and time taken for acquiring regulatory approvals continue to impact t
280、he viability of warehouse projects and are significant impediments in creating warehousing capacity.Market traction was seen improving toward the end of FY 2021 as vaccine availability improved and occupiers looked to revive expansion plans.However,the second wave of COVID-19 infections in FY 2021 h
281、ave again slowed the momentum.Occupier activity in FY 2022 will clearly be dictated by the intensity of the pandemic and should regain lost momentum as vaccine deployment improves and restores normalcy to economic activity.INDIA WAREHOUSING MARKET REPORT 2021STOCK AND SUPPLY DEVELOPMENT POTENTIAL AS
282、SESSMENTKnight Frank has conducted a ground-up survey of warehousing stock in the top eight markets of India to arrive at an assessment of the supply scenario that exists in the market today.The eight primary markets of India held an estimated 31 mn sq m(329 mn sq ft)of warehousing stock at the end
283、of FY 2021.The Mumbai market accounts for 42%of this stock and along with NCR accounts for 60%of the total stock.The vacancy levels in the Mumbai and NCR markets are relatively low and their high weightage in the total stock keeps the combined vacancy level of all eight cities at a comparatively hea
284、lthy 16.6%.However,the vacancy level has moved up by 130 basis points YoY in FY 2021 due to weaker transaction activity during the year.WAREHOUSING STOCK AND VACANCYMarket Existing Stock Vacancy Vacancy mn sq m(mn sq ft)FY 2020 FY 2021Mumbai 12.7(137)11.6%13.3%NCR 5.5(59)13.9%15.8%Pune 2.4(26)21.8%2
285、1.8%Chennai 2.3(25)14.7%13.1%Kolkata 2.1(23)20.6%21.5%Bengaluru 2.1(23)26.2%25.2%Ahmedabad 2(21)13.2%22.8%Hyderabad 1.4(15)22.4%18.9%Total 30.6(329)15.3%16.6%Source:Knight Frank ResearchWe estimate that the total land committed to warehousing development amounts to 22,488 acres in the top eight mark
286、ets and translates to a total buildable potential of almost 49 mn sq m(531 mn sq ft),after factoring in property level FSI dynamics.Given that 31 mn sq m(329 mn sq ft)of warehousing stock already exists on this committed land,this leaves nearly 19 mn sq m(202 mn sq ft)of potential warehousing space
287、that can come up on these warehousing land parcels.The eight markets can potentially add 61%more to the warehousing stock currently operational there,so they are said to have a total development potential multiple of 1.61.Compared to other property types,warehousing development takes relatively less
288、 time.A high-quality PEB warehousing facility can be fully developed from the ground-up within a period of one year,depending on the extent of treatment such as filling and levelling that the land requires.STOCK SPLIT BY GRADESource:Knight Frank ResearchMarket Grade A Grade BPune 71%29%Chennai 71%29
289、%Hyderabad 56%44%Kolkata 56%44%Bengaluru 42%58%Ahmedabad 30%70%NCR 29%71%Mumbai 18%82%Total 35%65%VACANCY SPLIT BY GRADEMarket Grade A Grade B TotalBengaluru 9.4%36.9%25.2%Chennai 11.2%17.4%13.1%Hyderabad 12.4%27.1%18.9%Kolkata 12.7%32.6%21.5%Mumbai 13.3%13.3%13.3%Pune 14.3%40.3%21.8%NCR 22.5%13.1%1
290、5.8%Ahmedabad 32.6%18.6%22.8%Total 15.1%17.5%16.6%1920Source:Knight Frank ResearchAnshul SinghalManaging DirectorWelspun One Logistics ParksThe COVID-19 pandemic has definitely accelerated the growth prospects of warehousing in India.When the world was struck by a catastrophe,warehousing and logisti
291、cs played an indispensable role-so much so that it began to get recognised as an essential services sector,forming the lifeline of the countrys GDP.The boom in online buying is noteworthy especially when it comes to Tier II and III cities,and will play an important role in the future of warehousing.
292、This spike in online buying will also lead to a demand for micro-warehousing hubs within cities,to ensure timely delivery and easy return of shipments.Thus,in-city/multi-storey/urban warehousing is fast emerging as the next big trend.Any e-commerce operation needs a strong and robust supply chain ne
293、twork,of which,modern warehousing forms a critical component.Grade-A facilities are high on specifications,allowing for the timelines that present businesses require,and are built to enable high-level automation in the future.Additionally,as investors are grappling with rebalancing their portfolios
294、to mitigate risk in this post-pandemic world,warehousing presents itself as one of the few bright spots in an otherwise difficult real estate investment scenario,since it is one of the few asset classes which provides both attractive development returns and stable long-term rental yields.Given this
295、backdrop,Indias warehousing story looks extremely attractive from a long-term demand-supply perspective.Within the real estate sector,warehousing has emerged as one of the more resilient asset classes.In 2020,vis-vis other real estate asset classes,warehousing rental values remained unchanged,and th
296、is can be attributed to sustained demand from occupiers coupled with already low vacancies.This also sets the stage for a likely quick uptick of rent once an overall recovery of the economic cycle sets in.At present,warehouse developers in India are already looking at consolidating their holdings.In
297、 the future,this will lead to large institutional holding of warehousing assets with the possibility of a warehousing REIT on the horizon.There is an expectation for warehousing REITs to develop 2x faster than other asset classes,due to factors such as longer and stickier leases,with typical leases
298、ranging from 7-15 years.These are going to be held by high-quality tenants who invest heavily within the warehouse itself,further adding to the stickiness factor and making these assets more stable in the long run.For a possible warehousing REIT in the future,the total Grade-A stock will need to ris
299、e at a quicker rate leaving tremendous room for growth.From the global REIT experience,size and scale are as important as the location and quality of the sponsor or the asset in REITs.Over the next few years,a high increase in demand is envisioned and it would be safe to say that the market is looki
300、ng at a minimum of 3-4 years for warehousing REITs to gain eminence in India.WA R E H O U S I N GM A R K E T SAhmedabad|Ambala-RajpuraBengaluru|Bhubaneswar|ChennaiCoimbatore|Guwahati|HyderabadKolkata|Lucknow|Ludhiana|Mumbai|NCRPune|Surat|Vapi|VisakhapatnamINDIA WAREHOUSING MARKET REPORT 2021INDIA WA
301、REHOUSING MARKET REPORT 20212122Anshul SinghalManaging DirectorWelspun One Logistics ParksThe COVID-19 pandemic has definitely accelerated the growth prospects of warehousing in India.When the world was struck by a catastrophe,warehousing and logistics played an indispensable role-so much so that it
302、 began to get recognised as an essential services sector,forming the lifeline of the countrys GDP.The boom in online buying is noteworthy especially when it comes to Tier II and III cities,and will play an important role in the future of warehousing.This spike in online buying will also lead to a de
303、mand for micro-warehousing hubs within cities,to ensure timely delivery and easy return of shipments.Thus,in-city/multi-storey/urban warehousing is fast emerging as the next big trend.Any e-commerce operation needs a strong and robust supply chain network,of which,modern warehousing forms a critical
304、 component.Grade-A facilities are high on specifications,allowing for the timelines that present businesses require,and are built to enable high-level automation in the future.Additionally,as investors are grappling with rebalancing their portfolios to mitigate risk in this post-pandemic world,wareh
305、ousing presents itself as one of the few bright spots in an otherwise difficult real estate investment scenario,since it is one of the few asset classes which provides both attractive development returns and stable long-term rental yields.Given this backdrop,Indias warehousing story looks extremely
306、attractive from a long-term demand-supply perspective.Within the real estate sector,warehousing has emerged as one of the more resilient asset classes.In 2020,vis-vis other real estate asset classes,warehousing rental values remained unchanged,and this can be attributed to sustained demand from occu
307、piers coupled with already low vacancies.This also sets the stage for a likely quick uptick of rent once an overall recovery of the economic cycle sets in.At present,warehouse developers in India are already looking at consolidating their holdings.In the future,this will lead to large institutional
308、holding of warehousing assets with the possibility of a warehousing REIT on the horizon.There is an expectation for warehousing REITs to develop 2x faster than other asset classes,due to factors such as longer and stickier leases,with typical leases ranging from 7-15 years.These are going to be held
309、 by high-quality tenants who invest heavily within the warehouse itself,further adding to the stickiness factor and making these assets more stable in the long run.For a possible warehousing REIT in the future,the total Grade-A stock will need to rise at a quicker rate leaving tremendous room for gr
310、owth.From the global REIT experience,size and scale are as important as the location and quality of the sponsor or the asset in REITs.Over the next few years,a high increase in demand is envisioned and it would be safe to say that the market is looking at a minimum of 3-4 years for warehousing REITs
311、 to gain eminence in India.WA R E H O U S I N GM A R K E T SAhmedabad|Ambala-RajpuraBengaluru|Bhubaneswar|ChennaiCoimbatore|Guwahati|HyderabadKolkata|Lucknow|Ludhiana|Mumbai|NCRPune|Surat|Vapi|VisakhapatnamINDIA WAREHOUSING MARKET REPORT 2021INDIA WAREHOUSING MARKET REPORT 20212122 The warehousing d
312、emand in Ahmedabad was predominantly driven by the industrial and manufacturing segments followed by the consumption demand.There are 4 major warehousing clusters in Ahmedabad:Aslali-Kheda,Changodar-Bagodara,Sanand-Viramgam and Chhatral-Kadi-Vithalapur-Becharaji belt.Aslali-Kheda and Changodar-Bagod
313、ara belts are bigger and established clusters.The Aslali-Kheda belt,located along the 3x3 lane Mumbai-Ahmedabad highway,is one of the oldest warehousing clusters of the city.The demand from the retail/consumption segment is the major driver of warehousing demand in this belt.High land prices and the
314、 expansion of Ahmedabad municipal limits have made it unviable to start a new warehouse in the Aslali-Jetalpur belt.The warehouses in this region are over 15-20 years old and lack modern offerings.Besides,most of the supply is controlled by local landowners.Better quality warehouses can be seen in t
315、he Bareja-Kheda belt and the land prices along this route are lower compared to Aslali-Jetalpur.The Changodar-Bagodara belt is an industrial region with a large part of the warehousing demand coming from the Other Sectors followed by e-commerce.This belt has good quality 3x3 lane roads with divider
316、separation.Many pharmaceutical companies and several large industries have their manufacturing facilities in the Changodar-Bagodara belt,and the region offers a well-developed ecosystem as required by manufacturing companies.Many logistics and warehousing park developers are active in this region an
317、d the early movers have already built a fully operational modern warehousing facility here.This belt had the highest share of transactions in FY 2021.The Sanand-Viramgam and the Chhatral-Kadi-Vithalapur-Becharaji belts are the automobile hubs in India.Some of the largest automobile companies along w
318、ith their ancillaries have their manufacturing facilities in these hubs.A H M E D A B A DW A R E H O U S I N G M A R K E T The Ahmedabad warehousing market witnessed leasing volumes of 0.27 mn sq m(3 mn sq ft)in FY 2021,recording a 42%YoY decline.This decline was on account of a pandemic induced slo
319、wdown of the economy and also due to the high base of FY 2020.Transactions in FY 2020 were whipped up by the large space take-up from the e-commerce and 3PL segments.In FY 2021,the space take up was driven by warehousing demand which garnered 68%share of the transactions.The industrial segments whic
320、h undertake various kinds of light to heavy manufacturing activities in warehousing parks had 32%share of transactions.Despite the lower transaction activity and higher supply,rents in Ahmedabad have corrected in the range of 2-4%in FY 2021.The interest from e-commerce for in-city warehousing contin
321、ues to grow.Large e-commerce companies have taken up smaller spaces to augment their in-city last mile delivery networks.These spaces have been transacted at much higher rents(2x-4x)compared to that for traditional warehousing.Major warehousing locations in AhmedabadWarehousing clusterWarehousing cl
322、uster Major warehousing locationsAslali-Kheda cluster Aslali,Jetalpur,Bareja,Kanera,Gobhalaj,Hariyala,KhedaChangodar-Bagodara cluster Changodar,Bavla,Bhayala,BagodaraSanand-Viramgam cluster Sanand,Sachna,ViramgamChhatral-Kadi-Vithalapur-Becharaji cluster Chhatral,Kadi,Vithalapur,BecharajiClassificat
323、ion of warehousing locations into major clustersSource:Knight Frank ResearchSource:Knight Frank Research|Map is for representation and not to scaleCHHATRALBECHARAJIKHEDAHARIYALABAREJAGOBHALAJKANERAJETALPURAHMEDABADBAVLABAGODARABHAYALASANANDSACHANAVITHALAPURKADIINDIA WAREHOUSING MARKET REPORT 202123I
324、NDIA WAREHOUSING MARKET REPORT 202124CHANGODA The warehousing demand in Ahmedabad was predominantly driven by the industrial and manufacturing segments followed by the consumption demand.There are 4 major warehousing clusters in Ahmedabad:Aslali-Kheda,Changodar-Bagodara,Sanand-Viramgam and Chhatral-
325、Kadi-Vithalapur-Becharaji belt.Aslali-Kheda and Changodar-Bagodara belts are bigger and established clusters.The Aslali-Kheda belt,located along the 3x3 lane Mumbai-Ahmedabad highway,is one of the oldest warehousing clusters of the city.The demand from the retail/consumption segment is the major dri
326、ver of warehousing demand in this belt.High land prices and the expansion of Ahmedabad municipal limits have made it unviable to start a new warehouse in the Aslali-Jetalpur belt.The warehouses in this region are over 15-20 years old and lack modern offerings.Besides,most of the supply is controlled
327、 by local landowners.Better quality warehouses can be seen in the Bareja-Kheda belt and the land prices along this route are lower compared to Aslali-Jetalpur.The Changodar-Bagodara belt is an industrial region with a large part of the warehousing demand coming from the Other Sectors followed by e-c
328、ommerce.This belt has good quality 3x3 lane roads with divider separation.Many pharmaceutical companies and several large industries have their manufacturing facilities in the Changodar-Bagodara belt,and the region offers a well-developed ecosystem as required by manufacturing companies.Many logisti
329、cs and warehousing park developers are active in this region and the early movers have already built a fully operational modern warehousing facility here.This belt had the highest share of transactions in FY 2021.The Sanand-Viramgam and the Chhatral-Kadi-Vithalapur-Becharaji belts are the automobile
330、 hubs in India.Some of the largest automobile companies along with their ancillaries have their manufacturing facilities in these hubs.A H M E D A B A DW A R E H O U S I N G M A R K E T The Ahmedabad warehousing market witnessed leasing volumes of 0.27 mn sq m(3 mn sq ft)in FY 2021,recording a 42%Yo
331、Y decline.This decline was on account of a pandemic induced slowdown of the economy and also due to the high base of FY 2020.Transactions in FY 2020 were whipped up by the large space take-up from the e-commerce and 3PL segments.In FY 2021,the space take up was driven by warehousing demand which gar
332、nered 68%share of the transactions.The industrial segments which undertake various kinds of light to heavy manufacturing activities in warehousing parks had 32%share of transactions.Despite the lower transaction activity and higher supply,rents in Ahmedabad have corrected in the range of 2-4%in FY 2
333、021.The interest from e-commerce for in-city warehousing continues to grow.Large e-commerce companies have taken up smaller spaces to augment their in-city last mile delivery networks.These spaces have been transacted at much higher rents(2x-4x)compared to that for traditional warehousing.Major warehousing locations in AhmedabadWarehousing clusterWarehousing cluster Major warehousing locationsAs