Bengaluru leads in leasing of warehousing

The implementation of the Goods and Services Tax (GST) across the country is having a positive impact on the warehousing segment, which witnessed a 50% increase in the leasing of warehousing space in the first half of 2017 compared with the second half of 2016, a report said.

According to a research report by CBRE South Asia Pvt Ltd, a real estate consulting firm, Bengaluru led leasing activity registering a rise of 180% when compared with H2, 2016. Warehouse leasing activity was concentrated towards the Eastern, Western and Southern corridors in the city with Eastern corridor witnessing the highest leasing activity during the period. On the supply side, Bengaluru witnessed a healthy growth of over 30% in new supply compared with H2, 2016.

Across key cities in India, approximately 7.3 million sq feet of industrial and warehousing space was leased in H1, 2017, a 50% increase from H2, 2016. The demand for logistics and warehousing space was primarily concentrated in Bengaluru (24%), Delhi NCR (21%) and Chennai (20%) indicating that the southern cities led demand during the review period.

Mumbai with a share of 13% was the only other city to witness sizeable transaction activity. Except for Kolkata, and Pune, all other cities recorded an increase in absorption of space during the period. From a sectorial perspective, growth in leasing activity was witnessed from all sectors, except pharmaceutical companies, which leased 20% less space when compared with H2 2016.

Anshuman Magazine, Chairman, India and South East Asia, CBRE said, “India’s industrial and warehousing segment has been witnessing increased activity over the past few years on the back of our growing economy. The sustained growth of the segment, coupled with the implementation of GST, will result in efficient supply chains and lower compliance costs; the benefits of which will eventually trickle down to make the reform a much needed incentive for businesses in India”