1. Aided by a growing economy, introduction of GST, and favorable policies, warehouses have grown increasingly in size, quality, and complexity. From 118 mn sq ft. in 2016 to 211 mn.sq.ft in 2019, the country has seen a growth of 44% in the warehousing space. Demand for warehousing has already gone up in the first half of the year and will rise further because of the gradually increasing demand from the tier II and tier III cities. The demand in these cities is primarily driven by e-commerce, 3PL and FMCG occupiers.
2. The ongoing lockdown, social distancing as a practice and other factors have brought about definite behavioural shifts among consumers who are now adapting to online shopping more as a norm for everything from essentials to non-essentials. E-commerce giants, e-pharma, FMGC, and 3PL companies are expected to ramp up their warehousing capacities heavily to store the rising demand for online shopping.
3. China which has always dominated the world trade, is now facing the risk of global ‘economic distancing’. While the trade war between the USA and China has deteriorated further, several African countries, Spain, Netherlands are following suit whereby now south-Asian countries like India and Mexico are gaining global attention for manufacturing at cheaper costs.
4. With the ‘Work from home’ trend her to stay, demand for office space is likely to be hurt in India. Many IT and IT-enabled service giants have already indicated substantial shift to work from home. Considering the current trend, investments in warehousing is already witnessing a massive demand in India.
5. Prime Minister Narendra Modi’s Atmanirbhar Bharat and shout out for ‘vocal for local’, ‘Make in India’, and ‘Make for the World’, means building capacities back home ultimately translating into the need for more warehousing space. Multiple MNCs’ the likes of Apple have announced setting their business operations in India owing to favourable government policies
While Covid-19 has pushed down sentiments in residential real-estate, Warehousing is a fast emerging as an asset class too and has caught the attention of PE investors and developers both overseas and back home.