Boost to Real Estate: Rise of e-commerce increases rates of Logistic & Warehouse

 

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By Rohit Sharma

MUMBAI:

The logistics and warehouse sector has rapidly seen the transformation in quality and quantity. It is been seen that as many as companies are investing in logistics and warehouse industry. Due to the rapid growth of E-commerce industry, it has automatically increased the demand for logistics and warehousing. However, both the sector has given a boost to the real estate industry. After too many policies and permissions applied to the realty sector including GST, Stamp Duty, etc have seen a downfall in this sector, according to few developers.

In a recent joint venture announcement between ESR and Allianz Real Estate of investing US$1 billion into India’s logistics and industrial property market, the official statement of the company said that, “In India, e-commerce revenue is expected to jump from US$39 billion in 2017 to US$120 billion in 2020, growing at an annual rate of 51%, the highest in the world.”

However, due to the increase in e-commerce companies, the cost of the warehouse has raised rapidly. It is said that the warehouse in India is at its nascent stage and will rapidly grow and compete with the commercial real estate market.

The increasing internet and Smartphone penetration, growing acceptance of online payments and favourable demographics will continue to propel e-commerce growth, and hence spurring demand for modern logistics facilities.

Anshul Singhal CEO – Embassy Industrial Parks in a recent interview with Accommodation Times said, “Globally, Industrial & Logistics Real Estate sector is the largest as compared to other Commercial Real Estate asset classes. In India, Industrial and Warehousing is at a nascent stage of market development and is poised to rapidly catch-up with Commercial and Retail Real Estate. Market estimates a CAGR of ~20% over the next 5 years. Grade A and B warehousing stock will grow at a CAGR of 21 per cent year-on-year taking the total tally of warehouse space in India to 297 million sq ft by the end of 2021, which is double the current warehousing stock of 139.8 million square feet in 2017.”

Over the next three-year period, an incremental  54 million sq. ft. per annum of warehousing space will be required in the top seven markets of India, he added.

Improvement in infrastructure will push city boundaries, and players will prefer large self-sustaining parks from the current fragmented smaller boxes. GST implementation has already pushed the market to this eventuality.





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