Bengaluru’s warehousing market witnesses 4.30 mnsq ft leasing in FY 2020: Knight Frank India

Bengaluru, July, 2020: According to the ‘India Warehousing Market Report 2020’ report launched by Knight Frank India, a global real estate consultancy, In FY 2020, Bengaluru saw a healthy warehouse leasing activity of 4.30 mnsq ft in FY2020. The real estate asset class in Bengaluru has witnessed a robust compounded annual growth rate (CAGR) of 50% for the period FY 2017-2020.

 According to the report, Bengaluru has a development potential multiple of 1.89, which implies that 89% more warehousing space can be added to the region. The current stock is reported to be 25mnsq ft with a potential of expansion to 48mnsq ft on the committed warehousing land parcel of 2,210 acres in Bengaluru. The rentals in Grade A properties for FY2020 have moved up in the range of Rs 16-30 sq ft/ month from Rs 14-23 sq ft/ month in FY2019.

In FY 2020, 38% of the warehousing space was leased by third-party logistics (3PL) followed by the E-commerce segment (37%). Major occupiers such as Reliance, Himalaya, D-Mart and Delhivery took up warehouses at the Nelamangala-Dabaspete. Knight Frank expects additional warehouse requirements to come up from electronics, FMCG and FMCD companies on both the Nelamangala-Dabaspete and Hoskote-Narsapura cluster from Japanese, European and Korean companies.

WAREHOUSING STOCK AND SUPPLY

Source: Knight Frank Research

*’Development Potential Multiple’ depicts the total development potential of the warehousing stock in a market, as a multiple of its existing stock

TRANSACTIONS IN THE WAREHOUSING SPACE

Source: Knight Frank Research

 CLUSTER-SPLIT AND INDUSTRY-SPLIT OF TRANSACTION VOLUME

Emerging warehousing locations such as Soukya Road, Bidadi, Bommasandra, Attibele-Anekal Road and Malur has taken a major chunk of share in Bengaluru market, followed by Nelamangala – Dabaspete cluster with 32% and Hoskote – Narsapura cluster with 12% respectively.

Shantanu Mazumder Senior Director, Bengaluru, Knight Frank India said, “ In the past two years, the Goods and Services Tax (GST) rollout has facilitated steady transformation of the warehousing market in Bengaluru Metropolitan Region’s (BMR) peripheral locations, where companies in ecommerce and logistics sector spearheaded rampant expansion activities due to consumer demand growth and parallel warehouse supply side augmentation. The Covid-19 pandemic and associated lockdown has tested the operational resilience of companies across all sectors and disrupted supply chains which were carefully put in place to reduce the operational and logistics cost post the GST implementation. We expect occupiers in FMCG, electronics, e-commerce and 3PL will be the prime sectors dictating leasing going forward.”

EXIHIBIT: SECTORAL SHARE OF WAREHOUSING TRANSACTIONS

Source: Knight Frank Research