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Warehousing, industrial space demand to be hit this year due to COVID-19

The demand for warehousing and industrial spaces will be adversely affected this year due to the Covid-19 pandemic, but the sector has bright prospects in the medium-to-long term driving on the growth of the e-commerce sector, according to experts. The government should prepare a national policy for industrialisation and ease land acquisition process to make India a manufacturing base and attract companies that want to shift operation out of China, they said at a webinar on the warehousing sector.

Niranjan Hiranandani, co-founder and managing director of Hiranandani Group, said there are huge development potential in the warehousing, industrial parks and data centre projects. About making India a manufacturing hub, he said, "Intention is there. Hopefully action will be there." Hiranandani, who is also president of Assocham and Naredco, said a lot of policy measures are needed to push manufacturing activities in India. He even suggested that the government should send a team to Vietnam for studying how it has been able to attract companies for setting up factories. The webinar 'Bridging the Middle- transforming warehousing Industry in India' was organised by Knight Frank and Reed Exhibitions India.

Rajesh Jaggi, vice-chairman (real estate) of Everstone Group, said this year could be a complete "washout" for the warehousing sector due to challenges posed by the coronavirus pandemic in both demand and supply sides. Jaggi is managing partner of Everstone-backed IndoSpace, which is into the warehousing and industrial space segment. "I am not at all bullish for the short-term perspective," he said, but added that medium-to-long-term growth prospects remained intact for both industrial space and warehousing. Post-Covid-19, Jaggi said there would be a thrust on e-commerce. "If India plays it right, we have a huge scope on industrialisation," he said. Jaggi advocated a pan-India manufacturing policy and a consolidated effort from both the central and state governments. "If we do not have a national policy on industrialisation, we are going to miss this opportunity," he said.

Jaggi said the company would continue to invest in this sector and has not changed the expansion plan.

To boost the manufacturing sector in India, All Cargo Logistics Chairman Shashi Kiran Shetty suggested that the government should revive special economic zones (SEZs) where both factories and warehousing can co-exist. He said the government's industrial development authorities and Railways have huge land bank that could be utilised for development purpose. "We need to move fast, else will miss a golden opportunity," Shetty said.

Shishir Baijal, chairman and managing director of Knight Frank India, said the warehousing segment has been least impacted and will also recover quickly compared to other asset classes in the real estate space. On Thursday, Knight Frank India reported that the warehousing demand fell 11 per cent during the last fiscal year at 41.3 million sq ft across eight major cities due to economic slowdown.

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