E-commerce boom to double India warehouse deals, says Knight Frank

Mumbai

AN e-commerce boom in India will more than double the size of warehousing space sought over the next five years, said Knight Frank.

Annual warehousing transactions in the top eight Indian cities will grow to 76.2 million square feet (sq ft) by March 2026 from 31.7 million sq ft in 2021, the research firm said in a report published on Tuesday. The predicted surge follows a drop in the past year due to the pandemic.

"Due to a greater internet penetration across India, e-commerce companies are also betting big on growth in tier two and three locations, which are becoming the preferred warehousing hubs and investment destinations," Rajesh Jaggi, vice-chairman for real estate at private equity firm Everstone Group, said in the Knight Frank report.

"The demand for Grade A compliant, multistorey warehouses will see a spike soon in these markets."

US giant Amazon.com is battling with India's richest man Mukesh Ambani's Reliance Industries for dominance of Indian consumers, in the world's only billion-plus retail market that's open to foreign competition.

There is growth potential for all; e-commerce accounted for just 4.7 per cent of total Indian retail in 2019 compared to 15.9 per cent in China and 19.2 per cent in the United Kingdom, said Knight Frank.

The e-commerce segment will take up 165 per cent more space in Indian warehouses over the next five years while third party logistics and other sector companies are expected to take up 56 per cent and 43 per cent, respectively, Knight Frank forecast.

Warehousing transactions in the top eight Indian cities fell 23 per cent to 31.7 million sq ft in the 12 months ended March from a year earlier.

Rent growth was also challenged as occupiers negotiated hard amid a surge in coronavirus infections and lockdowns. BLOOMBERG