Is warehousing the next big hot property in India?
There is much buzzing in India about warehousing space which is par and parcel of India’s logistics story. Big global investors might behind warehousing to invest their money. The returns in this sector as India moves towards a seamless nationwide market thanks to GST could be as mouthwatering as 20% plus for smart and early investors.
Lets us get a glimpse of what is happening in the space. Because warehousing is an integral part of logistics, we will start with numbers from the Economic Survey on what the potential size is? Now the total volume in 2018 for the sector is $160 bn going up to $215 bn in 2020, and that’s the expected growth of 10.5% if you take 2020.
Warehousing alone constitutes alone one-fourth of this opportunity. The tipping point for this sector, of course, came with GST but it just was not only GST which has been the tipping point for large institutional investors to enter the segment. There were a host of reasons like infrastructure status for logistics and transport, dedicated freight corridor and most important 100% FDI ( Foreign Direct Investment) in the sector has played the most significant move.
There is also an enormous opportunity remaining to consolidate the market. It is still very fragmented, dominated by unorganised players and even the majority of warehouses measure less than 10,000 sq.ft.
Since the tide has turned favourable for this business and hence the next five years, continue to offer great opportunities in India for warehousing space.