Both the Centre and state governments are now trying to promote investments in the logistics and warehousing sector. “Some measures include modifying policies to ease land acquisition, making land available for logistics projects under the newly formed logistics policies of various states, and monetising various government-owned land parcels belonging to port authorities, railways and highways through independent implementing agencies,” says Srinivas.
Also, an increasing number of PE firms and Indian corporates are foraying into the industrial and logistics real-estate sector. “They are being backed by international sovereign and pension funds focused on this sector because of its stability,” says Jasmine Singh, Senior Executive Director - Advisory & Transaction Services, CBRE. “This would certainly boost quality supply.” He further points to cities such as NCR, Mumbai, Pune and Chennai as major investment destinations, with Bengaluru, Amdavad and Hyderabad also on the investors’ radar.
Favourable government policies and strong inherent market demand are key factors driving demand in industrial real estate in the near future. Leasing activity in the sector is primarily driven by “e-commerce, FMCG and retail, who have been key occupiers in the past two to three years,” says Singh. Srinivas sees strong demand from e-commerce, 3PL or logistics, organised retail and auto companies for logistics in the next few years. “In 2018, almost 60 per cent of logistics absorption was by these sectors alone,” he shares.
Implementation of policy reforms has also created a profound impact—Singh sees GST as a game-changer here. Also, the grant of infrastructure status to the logistics and warehousing sector has led to increased investor interest. Srinivas also sees initiatives such as Make in India as major influencers.
In 2019, the leasing volume for warehousing space is expected to breach the 20 million sq ft mark. And as the sector witnesses the use of technology, coupled with the Government’s reform push, “corporates across sectors will be driven to opt for large, modern and energy-efficient warehouses,” says Singh.