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Lockdown to hit warehousing supply and leasing: Report

Demand and supply for warehousing space may soften in the wake of the coronavirus followed bylockdown, real estate consultant Savills India said in its report.

According to the reportIndia Front & Center – Production & Supply Chain’, post the outbreak of the pandemic, projection for warehousing and logistics leasing has been revised to 30 million sqft in 2020 from the previous estimate of 40 million sqft.

Similarly, fresh additional supply for warehousing space was previously estimated to be around 45 million sqft this year. It has now been revised to 12 million sqft for this year.

"The depth of eventual economic impact is not easy to ascertain for any segment of industry at the moment. However, despite the ambiguity, it is highly likely that warehousing and industrial sectors will recover stronger than most others in India,” said Arvind Nandan, Head of Research, Savills India.

The report said said that the total stock of warehousing and logistics space in India was previously estimated to be around 250 million sqft in 2020. Post-Covid 19, it has now been revised to 220 million sqft for 2020.

Due to sharp contraction in fresh supply, vacancy in large warehousing spaces is likely to be at 3%. Pre-Covid, vacancy for this year was earlier estimated to be around 10%.

“Apart from India’s tactical geopolitical advantages, the demand growth and policy-momentum of the past few years should hold the warehousing sector in good shape. There is no denying the risk-factors on labour or logistics front,” said Nandan.

The sector could see quick recovery of within 6 months post the pandemic or a moderately quick recovery of up to one year, the report said.

As per the research paper, more than 3 million sq. ft. of new contracts were signed across 6 locations by manufacturing, 3PL and e-commerce clients in last few weeks. There is a strong pipeline of development for warehousing and logistics space that is underway in the country. More than 3000 acres of land acquisition under in various stages of due diligence /closing for the purpose while institutional investment deals of around USD 600 million are currently in progress.

Apr 27, 2020

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