An e-commerce boom in India will more than double the size of warehousing space sought over the next five years, according to Knight Frank.
Annual warehousing transactions in the top eight Indian cities will grow to 76.2 million square feet by March 2026 from 31.7 million square feet in 2021, the research firm said in a report published Tuesday. The predicted surge follows a drop in the past year due to the pandemic.
“Due to a greater internet penetration across India, e-commerce companies are also betting big on growth in tier two and three locations, which are becoming the preferred warehousing hubs and investment destinations,” Rajesh Jaggi, vice chairman for real estate at private equity firm Everstone Group, said in the Knight Frank report. “The demand for Grade A compliant, multistorey warehouses will see a spike soon in these markets.”
U.S. giant Amazon.com Inc. is battling with India’s richest man Mukesh Ambani’s Reliance Industries Ltd. for dominance of Indian consumers, in the world’s only billion-plus retail market that’s open to foreign competition. There’s growth potential for all; e-commerce accounted for just 4.7% of total Indian retail in 2019 compared to 15.9% in China and 19.2% in the U.K., according to Knight Frank.
The e-commerce segment will take up 165% more space in Indian warehouses over the next five years while third party logistics and other sector companies are expected to take up 56% and 43%, respectively, Knight Frank forecasts.
Warehousing transactions in the top eight Indian cities fell 23% to 31.7 million square feet in the 12 months ended March from a year earlier. Rent growth was also challenged as occupiers negotiated hard amid a surge in coronavirus infections and lockdowns.
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