Connect with us

Marketing

Potential growth in Warehousing and Logistic sector: Dr. Niranjan Hiranandani

Published

on

Potential growth in Warehousing and Logistic sector

In India’s real estate scenario, there’s a new segment that is attracting big-time interest from investors – warehousing and logistics.

Warehousing space leasing rose by 85 percent to 25.7 million square feet in eight major cities during 2017, driven by high demand.

As per Knight Frank Warehousing Report 2018, around USD 3.4 billion of institutional capital came in the warehousing sector between January 2014 to 2018. Greenfield projects attracted more than two-thirds of these investments followed by one-third for the acquisition of completed projects.

For the growth of Indian industries and economic progress to accelerate, there is a dearth of an organized warehousing. Until now warehousing was concentrated in the city outskirt to reap the taxation benefits. 

The logistics sector was fragmented and lacked investment as a result of which the warehousing structures were basic and conventional. With the implementation, of structural reforms such as GST coupled with the planned government investment in improving transport infrastructure through Bharatmala. 100% FDI in warehousing, food storage facilities and the ‘Make in India’ were identified as the key initiatives to boost the sector. 

According to a KPMG Report released during a recent NAREDCO Real Estate & Infrastructure Investors Summit, the government is much focused and committed to providing world-class transport and infrastructure facilities in the country to support the potential economic growth.

The uniform tax rate under the purview GST has shifted the needle of growth to the new locations within the city limits. The new emerging locations have the advantage of ensuring an efficient supply chain which shall result in the consolidation of the industry. 

Thus, logistics and warehousing space is gaining industry momentum as a positive impact of new GST regime which aimed at economic realignment and industrial landscape also impacting the warehousing needs across industries.

From the real estate industry perspective, there lies a huge business opportunity.  The cost of logistics across India represents 14 percent of the GDP, and that a reduction in logistics cost will make domestic goods more competitive in global markets. 

Given this, the government has identified key areas such as dedicated freight corridor upgrading multi-modal logistics park development, seamless interstate movement, and electronic toll collection systems to further reduce logistics cost.

From an investment perspective in terms of new business opportunities, the growth of industrial and logistic parks will enable the creation of a Hub and Spoke model, which will bring in cost efficiencies and optimize delivery time.

The reduction in logistics costs from current levels to single digits as a percent of GDP represents a huge potential, which will act as a catalyst for investments in this asset class. Industrial and warehousing assets will generate stable yields next only to grade “A commercial office assets.

At Hiranandani Communities, the group has identified the new growth sector in terms of industrial and logistic parks. The group has forayed into the new markets like Pune, Chennai, and Nasik to begin with the operations very soon.

In conclusion, the high growth potential is an outcome of a conducive policy and financing method which the Indian Government has introduced in the country.

Thus, the positive steps undertaken by the government makes warehousing and logistics sector an attractive asset class for all the stakeholders including as investors from the near future perspective.

Guest Author: Dr.Niranjan Hiranandani, National President, NAREDCO

 

ALSO READ: Warehousing: Implementation of GST, REITs to give a push to stock in few years

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending

© 2018 RealtyNXT | All Rights Reserved