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3 million sq ft of warehouse space is likely to come up across Bengal in the next 18-36 months: Report

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According to a report, warehouse absorption stood at 3.3 million sq ft in 2019, a tad lower than the 3.4 million sq ft absorbed in 2018

Realty firm Hiranandani Group recently announced that it was entering into an equal joint venture with global investment firm Blackstone to develop industrial and warehousing assets. The JV will invest ₹2,500 crore over the next four years and it will include plots by Hiranandani Green Base’s 267 acres in Pune, 115 acres in Chennai, 73 acres in Nashik and around 25 acres in Durgapur (West Bengal).

The Hiranandanis are not the only ones to target warehousing space here in Kolkata and its peripheries. It is being said that approximately 2.5 – 3 million sq ft of warehouse space is likely to come up across Bengal in the next 18-36 months at an approximate investment of ₹750 crore. In fact, Bengal saw warehouse space absorption of 3.5 million sq ft in 2018; and a similar 3.5 million sq ft of absorption again in 2019, sources say.

“Most warehouses find occupancies within six months and a major chunk of this demand is now coming from e-commerce companies,” said Swapan Dutta, Senior Management, Knight Frank (India) Pvt Ltd, a real estate consultancy firm.

According to a report by property consulting firm Savills India, warehouse absorption stood at 3.3 million sq ft in 2019, a tad lower than the 3.4 million sq ft absorbed in 2018.

The report further states that nearly 30 per cent of the absorption was by e-commerce firms, another 26 per cent by 3PL (third-party logistics) and distribution players, 15 per cent by electronics firms and another 12 per cent by FMCG firms. Pharma and auto ancillary companies constituted the other major buyers.

Investors

A number of global PE funds and developers such as Morgan Stanley, ESR (backed by Warburg Pincus), Allcargo Logistics, Indospace, and Embassy, among others, are said to be in different stages of discussions across suburbs that are located some 30-50 km away from the city. Regional players like Srijan and the Jalans are also investing to set up warehouse infrastructure across these places.

According to Srinivas N, Managing Director, Industrial, Warehousing & Logistics, Savills India, the city and the eastern region were previously serviced from Hyderabad (Andhra Pradesh) or Delhi. But as connectivity improves, and the north eastern and eastern India markets open up, there is rising demand for infrastructure addition around Kolkata and the periphery to service these markets.

Savills has predicted that warehousing and manufacturing absorption will be to the tune of 3.5 million sq ft in 2020 and around the same number in 2021 and 2022.

“Opening up of markets in eastern India, improved focus and infra addition in North East along with better connectivity with the rest of India have seen rising demand for warehouses around Kolkata’s periphery,” he told BusinessLine.

Growing demand

Peripheral areas such as NH-2 ― which covers Delhi Road, Old Delhi Road, Dankuni ― or areas around NH-6 that include places like Dhulagarh, Satraganchi and Uluberia have seen highest traction. Nearly 87 per cent of warehouse space absorption for 2019 happened across these locations.

In the northern peripheries, which saw 3 per cent absorption, land along the Kalyani Expressway, Barasaat and BT Road are said to be in demand.

Better connectivity through these road stretches ― be with north India, eastwards or in the North East ― are seen to be major drivers.

Naturally, land which has proximity to the highways has seen a 30 per cent appreciation over the last four years, compared to the other plots where appreciation is to the tune of 10 per cent.

“As land along the highways are taken up, there will be appreciation of other plots that are slightly off the main roads,” Srinivas said.

New growth areas

Incidentally, growing focus on inland waterways and other port-led development is also pushing up demand for warehousing, specially in the southern peripheries. This has led to growth around the port area, Budge Budge Trunk Road and areas on Diamond Harbour Road. Approximately, 10 per cent of the absorption in 2019 happened in these areas, the report says.

However, limited space and high land prices continue to be impediments here.

Direct connectivity to Kolkata Port, ease in in-city distribution to southern parts and government initiatives to improve inland waterways have helped, the report further added.

Source: HBL

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

Source: Hyderabad only Indian city in Top 20 globally in-home price appreciation: Knight Frank

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