The Upsurge in the Warehousing Industry Explained
India’s big cities are witnessing a new phenomenon in the recent years. Warehousing corridors, such as the 40 km stretch that starts in Nelamangala and extends west, are springing up in different corners. The dealings of India’s growing consumer industry begin and end at these hotspots. Whether it is a warehouse in Bangalore or a logistics park in Delhi, the demand for storage facilities is rising due to a number of factors.
Warehouses in India today not only provide space, infrastructure or technology related facilities, but also provide value-added services. Consolidation, breaking up cargo, labelling, barcoding, packaging and even reverse logistics may be handled by them, which makes them worthy of investing in.
Apart from the evident growth in manufacturing activity, the rise in domestic consumption and international trade may be factors for the upsurge. The emergence of organised retail in India is also fuelled by increasing investment, both private and foreign, with regards to infrastructure and logistics. An additional factor may be the easing of government regulations and norms.
One such factor may be attributed to E-commerce and delivery businesses becoming key players and acquiring a share in the market. These sorts of businesses seek sites that are at a close proximity to a consumer base so that they can provide quick and efficient deliveries as a part of their service. The broadening of the horizons of Industrial Real Estate India can be credited to such new-age industries.
Customized facilities that make use of the latest technologies and provide maximum efficiency seem to be in big demand. If strong demand leads to low supply, developers become innovative and try to maximise value. They do this by re-building obsolete assets such as vacant retail stores and office buildings to be used for close-in warehousing and distribution. For such markets, strong demand and less supply extend upward pressure on the rental rates. To meet the demand, investors are building warehouses.
The interest of investors in the industrial sector is predicted to grow, and the future seems optimistic on the whole for this sector. Low yields and rising asset values may also be the trend.
Agricultural warehousing is another aspect that deserves attention. While about 60% of the modern warehousing capacity is concentrated in a few cities, growth in the agricultural warehousing sector can be expected due to normal monsoons and a high base.
India’s warehousing market may be fragmented, and face a number of limitations such as inadequate connectivity, lack of large capital and land acquisition issues. But going forward, it is reasonable to keep expectations high from this growing industry.
Warehouses in India today not only provide space, infrastructure or technology related facilities, but also provide value-added services. Consolidation, breaking up cargo, labelling, barcoding, packaging and even reverse logistics may be handled by them, which makes them worthy of investing in.
Apart from the evident growth in manufacturing activity, the rise in domestic consumption and international trade may be factors for the upsurge. The emergence of organised retail in India is also fuelled by increasing investment, both private and foreign, with regards to infrastructure and logistics. An additional factor may be the easing of government regulations and norms.
One such factor may be attributed to E-commerce and delivery businesses becoming key players and acquiring a share in the market. These sorts of businesses seek sites that are at a close proximity to a consumer base so that they can provide quick and efficient deliveries as a part of their service. The broadening of the horizons of Industrial Real Estate India can be credited to such new-age industries.
Customized facilities that make use of the latest technologies and provide maximum efficiency seem to be in big demand. If strong demand leads to low supply, developers become innovative and try to maximise value. They do this by re-building obsolete assets such as vacant retail stores and office buildings to be used for close-in warehousing and distribution. For such markets, strong demand and less supply extend upward pressure on the rental rates. To meet the demand, investors are building warehouses.
The interest of investors in the industrial sector is predicted to grow, and the future seems optimistic on the whole for this sector. Low yields and rising asset values may also be the trend.
Agricultural warehousing is another aspect that deserves attention. While about 60% of the modern warehousing capacity is concentrated in a few cities, growth in the agricultural warehousing sector can be expected due to normal monsoons and a high base.
India’s warehousing market may be fragmented, and face a number of limitations such as inadequate connectivity, lack of large capital and land acquisition issues. But going forward, it is reasonable to keep expectations high from this growing industry.
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