Warehousing space demand in seven major cities in India is likely to grow 8 percent annually to touch 839 million sq ft in the next 4 years driven mainly by manufacturing and e-commerce sectors, says a report.
According to the report by property consultant Knight Frank India, the seven cities are National Capital Region, Mumbai, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.
Investment in warehousing could give a return in the range of 10-24 percent per annum, said the report, 'India Warehousing Market' With investment returns of 22-24 percent per annum, Pune offers the best investment opportunity in India.
"The total warehousing space requirement in these markets is expected to grow at a compounded annual growth rate (CAGR) of 8 percent from 621 million sq ft in 2016 to 839 million sq ft by 2020," the report said.
Over the next four-year period, an incremental 218 million sq ft warehousing space would be required. About 54 million sq ft will be required annually in these seven markets.
At present, 17 million sq ft of space is transacted annually in these top seven warehousing market.
"While factors such as Goods and Services Tax (GST) and 'Make in India' initiatives will push the requirement from the manufacturing sector, it is the E-tail sector that will lead in terms of growth for warehousing space," the report said.
The requirement from the e-tail segment will more than double from 14 million sq ft in 2016 to 29 million sq ft by 2020, resulting in an annual growth rate of 19 percent.
In the traditional brick-and mortar retail, the demand for space is expected to grow by 6 percent annually to touch 154 million sq ft in 2020 from 120 million sq ft currently.
The demand for space from manufacturing sector is likely to reach at 656 million sq ft in next four years from 487 now, thereby growing by 8 percent annually.
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