West Bengal, particularly Kolkata and its suburbs, is fast emerging as one of the major warehousing and logistics markets in India. According to sources, , deals worth ₹500-₹700 crore are already in different stages of discussions or are being inked. Kolkata and the suburbs took up warehousing space to the tune of 3.5 million square feet last year (in 2018).
Some of the areas that are fast turning out to be the hotbeds, include those along the National Highway 2 (Delhi Road) and National Highway 6 (Bombay Road). As per sources, some 500 acres of land across villages along the Delhi Road and Bombay Road areas are under negotiations.
In fact, logistics-focused global PE funds and developers such as Morgan Stanley, ESR (backed by Warburg Pincus), Allcargo Logistics, Indospace, Embassy and others are the ones puttingin big money.
The Delhi Road, Old Delhi Road and Bombay Road areas are around 30-40 kms from the city and covering districts of Howrah and Hooghly. Apart from proximity to the city, Kolkata in this case, these places are well connected to the North Indian states on one side and with the other Eastern and North Eastern ones on the other. Naturally , most areas along the highways are being looked into by developers and PE funds.
GST, better connectivity to other Eastern and North Eastern states, higher penetration of e-commerce and a better ‘hub and spoke’ model have been some of the reasons which have made developers and PE funds look at the eastern region.
Swapan Dutta, Branch Director Corporate – Senior Management at Knight Frank (India) Pvt Ltd, pointed out that there is a distinct move from smaller warehouses in northern and south western fringes of the city. The preferred areas include those along the highways.
“At least ₹500₹-700 crore worth of warehousing and logistics projects are coming up around NH 2, NH 6 and Old Delhi Road areas. May be in another 12-15 months they will be ready,” Dutta had previously told BusinessLine.
Nearly, 80-90 per cent of the upcoming Grade A and Grade B warehousing stock are along the NH6 and NH2 and adjoining areas.
Industry sources pointed out that with there being lack of land availability around the Bombay Road area (NH6), the development activity is shifting to the Delhi Road (NH2) and the adjoining old ‘Old Delhi Road’ area. A number of closed industrial units and available land parcels have made expansion in the ‘Old Delhi Road’ area more feasible.
Depending on the success of the existing projects, more would be looked into in districts like Burdwan, other places in Hooghly and so on.
Naturally, land prices there have seen a 30 per cent jump. From 70 lakh an acre, land prices now hover around ₹one crore per acre . An additional ₹1,500 per sq ft is spent on development.
“Apart from the land cost, companies are also spending additionally for construction. Thus, there will be multiplier effect when it comes to investments,” an industry source said.
Real estate consultants JLL had in a 2018 report stated that in between 2018 and 2020 there will be ₹4,300 crore of investments in warehousing and logistics in the state.
The major customers who have come-in include FMCG players, and e-commerce companies such as Flipkart and Amazon. This apart, a host of 3PL players, like Mahindra Logistics, are also taking up space or across upcoming logistics parks.
Knight Frank in its India Warehousing Market 2019 report said that total warehousing space estimated to be 68 million sq m (739 million sq ft) in 2019 for the manufacturing sector which is projected to grow at a compounded annual growth rate (CAGR) of 5% in the next five years to 86 million sq m (922 million sq ft) by 2024.
Kolkata warehousing market clocked in 0.4 million sq m (4.7 million sq ft) absorption in 2018. The sudden surge in demand for warehousing space in Kolkata over 2017 led to a massive 191 per cent year on-year (YoY) growth in total leasing making it the highest across the top eight cities in India.
Source: THE HINDU BusinessLine