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Warehousing, food storage services companies keen on India

The Hindu BusinessLine (PDF)

Global warehousing and food storage services companies are showing keen interest to invest in India.

“An improving domestic economy and legislative reforms has encouraged foreign companies to set up their manufacturing base in India,” Anshuman Magazine, CMD of CBRE South Asia, told BusinessLine.

“Few companies have already expressed interest. Recently, companies like Blumberg Grain, a US-based warehousing solutions provider, have shown interest to establish their manufacturing base and warehousing facilities,” he added.

The entry of such brands may help the existing technological know-how in the field, and improve them to global standards, thus creating more employment opportunities.

Delhi-NCR, Mumbai and Bengaluru are likely to remain major hubs for retail distribution centres; Pune and Chennai are likely to see healthy demand for industrial warehousing.

Magazine said, “Furthermore, with the implementation of the Goods and Services Tax (GST), certain locations may witness a spill-over in demand due to the sheer cost advantage.”

He added, “The GST and a thriving e-commerce industry are expected to play a pivotal role in shaping future warehousing trends over the months. Driven by cost savings, consolidation activity in the warehousing space has already been noted; this trend is likely to gain momentum.”

Rentals harden

Sustained demand, coupled with limited quality supply, in H1 2015 led to a steep rental appreciation (22-24 per cent) in micro-markets such as Gurgaon (NH-8) and Kundli-Murthal (NH-1) in Delhi-NCR, when compared to January-June, 2014.

In addition, locations such as Delhi and Chandogar (Ahmedabad) also witnessed rental appreciation of 12-13 per cent over the second half (H2) of 2014.

According to Magazine, enhanced demand and enquiry levels for warehousing and logistics facilities, amid non-availability of quality supply in various locations in Chennai, Ahmedabad and Kolkata, resulted in appreciation of 4-5 per cent (compared to H2 2014).

However, rental values in locations like Bhiwandi (Mumbai), North Chennai (Madhavaram, Manali, Redhills) along with Chakan, Sanaswadi and Pimpri (Pune), remained largely stable.

“Later this year, we are likely to witness supply addition across certain areas in Delhi-NCR and Kolkata. Development activity is likely to pick up in Gujarat as well,” said Magazine.

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