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Leasing of industrial, warehousing space to grow 83 pc: Savills

Industrial and warehousing space absorption is expected to grow by 83 per cent to 47.7 mn sq. ft. in 2021, driven by a robust growth in e-commerce and manufacturing sectors as well as rising demand in emerging Tier-I and Tier-II cities, according to Savills India, a global property consultancy firm.

The 3PL and e-commerce sectors continued to drive warehousing demand accounting for 60 pc of the total absorption in 2020, followed by manufacturing sector at 24%. The growing numbers of firms in these sectors and the huge Indian consumption market have whipped up the investment prospects of India’s warehouse sector. In 2020, the industrial and warehousing market witnessed investments in excess of $1 billion.

Among the major cities in India, NCR led with the highest absorption in 2020 at 25 per cent followed by Pune at 15 pc. Mumbai and Chennai saw absorption at 13 pc each while Kolkata stood at 12.0 pc. The Tier-II cities such as Ludhiana, Lucknow, Coimbatore, Jaipur, Guwahati, Bhubaneswar, Nagpur and Patna witnessed around 3 mn sq. ft. in 2020. These cities are likely to gain momentum in 2021 with e-commerce and 3PL firms capitalising on consumption-driven growth and pushing the demand for warehousing space.

On the supply side, Savills India expects a 113 pc increase in supply to 47.9 mn sq. ft. in 2021. Despite construction activities getting affected due to the lockdown, the top-8 cities of India witnessed a fresh supply of 22.4 mn sq. ft. last year. NCR accounted for 22 pc of the total supply witnessed in 2020 followed by Chennai (20 pc), and Bengaluru (12 pc). The overall industrial and warehousing space stock is expected to increase by 21% at 278 mn sq. ft. in 2021 as compared to 230 mn sq. ft. last year.

“Growing demand for cold chain, pharmaceutical warehouses as well as growth in e-commerce and organised retail are likely to drive warehousing demand in 2021. In addition, strong macro-economic fundamentals and government’s policy support in implementation will continue to fuel growth for the entire sub asset class of industrial and logistics”, said Srinivas N, Managing Director, Industrial and Logistics, Savills India.