Total warehousing space requirement in India expected to grow at a CAGR of 9% from 919 mn sq. ft. in 2014 to 1,439 mn sq. ft. by 2019-India Logistics & Warehousing report 2014
Knight Frank India launched the first edition of India Logistics & Warehousing Report 2014 on 7 July 2014. The report explores the present scenario of the Indian Logistics sector along with providing a definitive view on the Mumbai and Pune Warehousing markets.
• Manufacturing will continue to remain one of the biggest demand drivers of the warehousing sector with an annual requirement of 61 mn sq. ft. of incremental space between 2014 and 2019
• With the government’s renewed focus on incentivizing the manufacturing sector, the logistics market will reap the benefits in the coming years
• Investment in warehouse can provide an opportunity of 12-20% returns per annum
• The biggest challenge though for manufacturers is the present Central Sales Tax structure which is forcing companies to locate warehouses in all the states they operate in, resulting in an inefficient supply chain
• Introducing GST will streamline the taxation procedure thereby creating an effective supply chain
Indian companies have so far considered warehousing as an unavoidable expense that needs to be reduced as much as possible. This attitude has resulted in huge under-investment in the sector. "Increasing competition and introduction of global best practices by multinational companies are compelling Indian businesses to rethink on the importance of warehousing activity and the resultant benefits of managing an efficient supply chain,” said Rajeev Bairathi, Executive Director, North & Capital Transactions Group, Knight Frank India.
”Supply chain management is all about flow, be it the flow of goods from the producer to the consumer or flow of information from the consumer to the producer. Warehouses play a critical link in this processand were conventionally set up as inventory buffer points along the supply chain so that any irregularities within this chain could be ironed out.," said Dr. Samantak Das, Chief Economist & Head of Research, Knight Frank India. "However, the need to reduce the service response time and contain inventory cost has necessitated the progression of warehouses from storage points to distribution centres.Additionally, the advent of technology has made it possible to operate the warehouses more efficiently and achieve greater integration with the rest of the supply chain modules.”
“With Focus returning on pushing manufacturing and GST Implementation back on the discussion table, “Ache din” expected for Warehousing and Logistics sector over which will become a must watch category over the next 5 years” concluded Balbirsingh Khalsa, National Director, Office & Industrial Agency, Knight Frank India
Knight Frank India launched the first edition of India Logistics & Warehousing Report 2014 on 7 July 2014. The report explores the present scenario of the Indian Logistics sector along with providing a definitive view on the Mumbai and Pune Warehousing markets.
• Manufacturing will continue to remain one of the biggest demand drivers of the warehousing sector with an annual requirement of 61 mn sq. ft. of incremental space between 2014 and 2019
• With the government’s renewed focus on incentivizing the manufacturing sector, the logistics market will reap the benefits in the coming years
• Investment in warehouse can provide an opportunity of 12-20% returns per annum
• The biggest challenge though for manufacturers is the present Central Sales Tax structure which is forcing companies to locate warehouses in all the states they operate in, resulting in an inefficient supply chain
• Introducing GST will streamline the taxation procedure thereby creating an effective supply chain
Demand
for Warehousing Space in India 2014-2019 (in mn. sq. ft.)
Total warehousing
space requirement
|
CAGR*
|
Total additional
space required from 2014-2019
|
Annual additional
space required from 2014-2019
|
||
2014 (E)
|
2019 (P)
|
||||
Manufacturing
|
631
|
939
|
8%
|
307
|
61
|
Consumption
|
76
|
115
|
9%
|
39
|
8
|
Exim**
|
211
|
386
|
13%
|
174
|
35
|
Total Warehousing
|
919
|
1439
|
9%
|
520
|
104
|
Feasible Investor Return in Mumbai and Pune Warehousing Markets
Warehousing market
|
Land rate
(INR mn./acre) |
Warehouse rentals
(INR/sq.ft./month)
|
Feasible investor
return
|
Chakan
|
22 -35
|
18 -24
|
12% - 20%
|
Chakan-Shikrapur Road
|
15 -18
|
15 - 18
|
12% - 20%
|
Wagholi-Lonikand-Sanaswadi Cluster
|
19 -38
|
14 -18
|
12% - 16%
|
Bhiwandi
|
15 -40
|
9 - 15
|
12% - 16%
|
Rasayani-Patalganga
|
18 - 25
|
18
|
12% - 20%
|
Nadhal-Khalapur
|
15 - 25
|
16
|
12% - 20%
|
”Supply chain management is all about flow, be it the flow of goods from the producer to the consumer or flow of information from the consumer to the producer. Warehouses play a critical link in this processand were conventionally set up as inventory buffer points along the supply chain so that any irregularities within this chain could be ironed out.," said Dr. Samantak Das, Chief Economist & Head of Research, Knight Frank India. "However, the need to reduce the service response time and contain inventory cost has necessitated the progression of warehouses from storage points to distribution centres.Additionally, the advent of technology has made it possible to operate the warehouses more efficiently and achieve greater integration with the rest of the supply chain modules.”
“With Focus returning on pushing manufacturing and GST Implementation back on the discussion table, “Ache din” expected for Warehousing and Logistics sector over which will become a must watch category over the next 5 years” concluded Balbirsingh Khalsa, National Director, Office & Industrial Agency, Knight Frank India