Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
According to a white paper titled 'Ahead of The Curve - Bengaluru Warehousing' by India Sotheby's International Realty in collaboration with CRE Matrix, Bengaluru is expected to experience a surge in investment to develop high-quality warehousing parks. This is in response to the increasing demand for storage space from e-commerce and third-party logistics companies. Over the past five years (2018-2022), the demand for warehousing has surpassed the new supply, resulting in low vacancy rates and a significant growth in rental prices.
Based on data provided by CRE Matrix, Bengaluru witnessed a cumulative absorption of 16.34 million square feet of warehousing space from 2018 to 2022, while the new supply was 10.5 million square feet. Gagan Randev, the Executive Director - Capital Markets at India Sotheby's International Realty, stated that Bengaluru will attract investments for warehouses with larger capacities to meet the rising demand. It is projected that more than 250 acres of land on the outskirts of Bengaluru will be required to develop new warehousing facilities.
The market has also observed an upward trend in rental prices, particularly in 2022, with a remarkable increase of 10%, surpassing the average rental hikes of 5-6% in previous years. Harikesh Ananthamurthy, the Senior Vice President - Capital Markets at India Sotheby's International Realty, emphasized that this trend indicates a tightening market. Owners now have an advantage in negotiating more favorable rental terms with new tenants. The significant 10% increase in market rentals compared to the 2% increase in in-place rentals in 2022 clearly demonstrates this positive trend.
Ananthamurthy further stated that the demand for warehousing will be driven by sectors such as manufacturing, logistics, e-commerce, and retail, with logistics and e-commerce companies becoming major occupiers. Randev added that the participation of larger organized players in the industry has led to a shift towards automation, integration of Internet of Things (IoT), improved warehouse management systems, enhanced security measures, and a focus on creating environmentally friendly and sustainable built environments.
Several prominent players, including All Cargo, Welspun, IndoSpace, Prologis, Panattoni, RMZ, The House of Hiranandani, Lodha (Macrotech), ESR, CapitaLand, Morgan Stanley, Horizon Industrial Parks, and Greenbase, are actively expanding their presence in the warehousing segment. Partnerships between funds like Blackstone and Prologis with strong domestic players have helped overcome land challenges and facilitated the acquisition of large parcels in an organized manner.
The paper also noted that the demand for land in Bengaluru is expected to be evenly distributed among different clusters due to the city's expansion and peripheral ring road, which allows for seamless transfer between clusters and consumption centers.
India Sotheby's International Realty highlighted that organized large players are acquiring land with long-term demand in mind, despite challenges in availability and conversion. The valuation of land depends on anticipated earnings, construction costs, and approval expenses. The sector is witnessing a push towards automation, IoT integration, improved warehouse management, enhanced security, and sustainability.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
