Warehousing & logistics sector to grow at 35% in 2021: Report
The Welspun One Logistics Parks (WOLP) report estimates the warehousing and logistics industry to grow at 35% in 2021 as opposed to the earlier predicted demand of 25%
The warehousing and logistics asset class could be among the fastest to recover from the coronavirus crisis, a report says, citing an expected increase in domestic demand and possibility of global firms shifting manufacturing to India to de-risk supply chains as reasons.
The Welspun One Logistics Parks (WOLP) report estimates that the warehousing and logistics industry will grow at 35% in 2021 compared with the earlier industry demand forecast of 25%.
“The transition of retail to online and larger inventory levels by ecommerce players will speed up the warehousing demand further. The resulting impact will be felt substantially in demand for inner-city logistics and cold chain facilities,” Welspun One Logistics Park managing director Anshul Singhal said, adding that the firm is in talks to raise capital to expand its business across the country.
The segment is also expected to attract a large pool of capital with fund managers looking at warehousing and industrial real estate as a safer, resilient and scalable asset class for their investors.
“There is significant amount of cash available to be invested in the warehousing and logistic space. The focus will be on long-term strategy, but in the short term, funds will be cautious to put in money,” said Aloke Bhuniya, CEO of Ascendas Firstspace, a joint venture between CapitaLand and Firstspace Realty.
Occupiers are also expected to look at backup storage options in terms of large warehouses in tier 2 & 3 markets to further de-risk their supply chains, away from the tier 1 cities which have been highly affected.
”We are strategising and looking at newer markets like Gujarat and Kolkata to expand our business. There is a lot of uncertainty in the market due to Covid-19, but at the same time there are some large demands for warehousing floating in the market too,” said Aditya Virwani, COO, Embassy Group.
According to the report, unlike other real estate asset classes, the warehousing sector is fully prepared and mature to be able to scale and take advantage of the increase in demand due policy initiatives like GST, infrastructure status and 100% FDI approvals. The year 2019 also saw larger funds and developers evaluating regional developments having strong tenant profile with a combination of land and stabilised assets. Global funds like Blackstone, ESR and Morgan Stanley are some of the firms that invested in a combination of platform or project level deal.
May 13, 2020