Everything you need to know about India’s logistics sector today | Real Estate Asia
, India

Everything you need to know about India’s logistics sector today

This segment accounted for over half of all private equity investments in Q2.

India’s logistics and industrial (L&I) sector has always been an outperformer in the country’s real estate market. In the second quarter of 2021 alone, the L&I sector accounted for over half of all private equity investments in the country, primarily driven by the warehousing segment. 

According to Cushman & Wakefield, with HNIs and Indian corporate houses also in the fray to undertake sale/purchase of warehousing assets in tier-II and III cities, there is further exuberance in this market. 

Here’s more from Cushman & Wakefield:

Spurt in digital adoption leads to demand-supply mismatches

Over the last six quarters since the start of the pandemic, a widespread adoption of digital stream in India has resulted in meteoric growth in the e-commerce segment. Currently, this demand is hugely focused on large consumer markets of Mumbai MMR, Delhi NCR and Bengaluru, among few others. However, we are gradually seeing demand percolate to relatively smaller markets as well. As a result, quality supply, which can cater to requirements of a fulfillment center (FC) of large 3PL and e-commerce players has come in short supply. This demand-supply mismatch is even likely to shift a portion of the latent demand to Grade-B facilities, thereby reducing existing vacancies in such warehouses too in the near-term. 

Deal sizes on the rise; newer markets emerge

The average deal sizes across three major cities of Mumbai MMR, Delhi NCR and Bengaluru have witnessed a rise. Individual transactions above 100,000 sq. ft. increased by 50% in 1H-2021 on a y-o-y basis, thereby raising the bar in terms of deal size & quality space requirements. Besides the traditional sectors of FMCG, manufacturing, and automotive, certain newly emerged sectors of e-commerce as well as other tech-based platforms (online car dealers, online groceries, DIY furniture etc.) are demanding large-sized facilities at single locations. 

Established L&I markets such as Bhiwandi (Mumbai), Chakan (Pune), Bilaspur (NCR), Bommasandra (Bengaluru) are nearing saturation or lack space for bigger Grade-A developments. Therefore, over the years, we have witnessed growth in newer markets within these cities. As a result, markets like Taloja near Mumbai, North West corridor near Bengaluru, Sriperumbudur near Chennai, and Farukhnagar near NCR are rapidly developing. Some of these emerging markets now have high presence of Grade-A warehouses, therefore, commanding rentals that are similar or higher than the established markets.  

Scope for growth of the organized sector is fast emerging

Dearth of quality spaces have resulted in many companies opting for space in conveniently located Grade-B spaces as well, although there is a greater sense that a gap in quality persists and must be bridged soon. Large developers as well as institutional investors are already in the process of executing 85-90 msf of new warehousing space. These are expected to be completed over the next 24-30 months, bringing relief to manufacturers, logistics players as well as online retailing businesses. Clients are preferring to drift away from traditional landlords to more professionally-run / institutional landlords, thereby enabling the organized players to increase market share rapidly. 

Significant institutional interest

A rising interest by large foreign investors has led to L&I market yield compression as more money now chases limited number of quality assets. Yields that were in the range of 8.0-9.0% until a year back is gradually coming down, with recent few deals observed at sub-8.0% yields. 

Conducive ecosystem created by the government

Policies of the last few years along with aggressive plans for infrastructure development including highways, airports and capacity expansion at ports will further the growth achieved by creating an enabling ecosystem. The granting of “infra status” to the sector, 100% FDI permit under the automatic route, GST and production-linked incentive (PLI) schemes have together helped spur demand. Furthermore, the much-awaited National Logistics Policy aims to enhance competitiveness of the sector through targeted reduction in logistics cost. 

The way forward

The under-current of rising institutional participation and technology-adoption will ensure adequate fund flows as well as technical know-how within the Indian L&I space. The aggression displayed by institutional players firms-up our belief that a market consolidation could be happening in the near-to-medium term, with few large operators enjoying a reasonably dominant market share. More entrenched organized players will bring in best practices in warehouse design, management, and automation.

Follow the link s for more news on

Pasokan ritel Jakarta akan mencapai 5 juta meter persegi tahun ini

Tiga mal baru saat ini sedang dalam tahap konstruksi.

Jakarta akan mendapatkan lebih dari 1.800 kamar hotel mewah baru pada akhir tahun ini

Ini akan menjadi angka tertinggi selama tiga tahun ke depan.

Perkantoran Jakarta diperkirakan mencapai 76% pada akhir tahun

Tingkat okupansi rata-rata  perkantoran di CBD mencapai 74,7% pada Q1.

Jakarta akan menyaksikan lebih dari 9.300 unit hunian baru pada 2026

Hampir setengah dari unit ini akan selesai tahun ini.

Apa yang dapat dipelajari oleh pengembang properti dari Azabudai Hills di Jepang

Pengembangan senilai US$4 miliar ini bertujuan untuk menjadi pusat internasional bagi warga asing dan perusahaan modal ventura.

JLL: Pasokan ritel utama di Jakarta diperkirakan akan 'langka'

Meskipun ada mal baru yang akan dibuka pada paruh pertama 2024.