After witnessing a decline in leasing activity during 2013 due to weak consumer sentiment and economic slowdown, logistics and warehousing sectors are likely to revive on the back of various measures taken by the government to improve investment flows into these sectors.
A survey by CBRE underlined that owing to the weak consumer sentiment and economic slowdown, logistics and warehousing sectors witnessed a decline in leasing activities last year, thus putting pressure on rental values.
"Despite an improvement in investment flows in 2013, general economic slowdown and weak consumer sentiment impacted the logistics and warehousing sectors. Leasing remained low and the size of space taken-up was limited during H2 2013," CBRE South Asia Chairman and Managing Director Anshuman Magazine said.
According to the report, demand for logistics and warehousing space was largely driven by the Fast Moving Consumer Goods (FMCG) and third party logistics (3PLs) sectors.
Engineering and manufacturing firms, however, adopted a wait-and-watch approach, resulting in leasing and transaction activity declining across most warehousing micro-markets during the period.
Due to weak leasing sentiment, rental values either remained stable or witnessed a marginal decline across markets, the report said.
The northern corridor of Hyderabad, Bhiwandi near Mumbai, the southern corridor of Bangalore, and the northern industrial belt of Chennai were some of the preferred micro-markets among FMCG firms in 2013, says the report.
Similarly, Kolkata also witnessed small-to-medium sized transactions along the NH-2 (Grand Trunk Road) and NH-6 stretches, primarily from 3PLs and manufacturing firms.
Delhi observed a strong demand for warehousing space with rentals witnessing a 10-11 per cent increase across all micro- markets in the region during this period.
Gurgaon NH-8 (Haryana), on the other hand, remained the most preferred market and observed demand from automotive and logistics companies for setting up large warehouse developments and distribution centres.
"The market is expanding geographically with new developments coming up along NH-71 A from Kulana to Jhajjar. Locations such as Dungarwa, Raliawas and Rewari (Daruhera) are also emerging locations for warehousing in this region," Magazine said.
The deployment of the New Delhi-Mumbai Industrial Corridor (DMIC) project and the execution of pending infrastructure projects are likely to further boost the warehousing market in Delhi NCR, he said.
