Kolkata, Oct 25 : Industrial and logistics space absorption in this metropolis grew by 32 per cent Y-o-Y to 2.7 mn. sq. ft. in January-September ’23 compared to 2 mn. sq. ft. in January-September ’22, according to a published report of CBRE South Asia Private Limited., India’s leading real estate consulting firm.
The city also recorded a supply addition of 4.3 mn. sq. ft. during the Jan-Sep’23 period, the report “India Market Monitor Q3 2023’ announced on Wednesday.
The report highlighted the growth trends and dynamics across the real estate sector across India accounting for a 10 pc share in the overall leasing among top 8 cities in India. Third-party Logistics, Retail and Auto & ancillary companies dominated absorption in Jan-Sep’23.
During the Jul-Sep’23 quarter, total leasing in the city stood at 1 mn. sq. ft. and a supply addition of 1.1 mn. sq. ft. was also observed.
On a pan-India basis, the Industrial & Logistics (I&L) sector is likely to touch a 5-year high absorption mark and touch 36 – 38 mn. sq. ft. in 2023 across top 8 cities in India. Supply addition, too, is expected to outperform, touching 35 – 37 mn. sq. ft. by the year-end, driven by the completion of pent-up projects.
The leasing in the I&L sector grew by 13% Y-o-Y in the Jan-Sep’23 period. The total absorption across the top 8 Indian cities stood at 27.3 mn. sq. ft, compared to 24.2 mn. sq. ft. in Jan-Sep ’22. Mumbai, Chennai, and Delhi-NCR collectively accounted for a share of 56% in the leasing activity during the Jan-Sep’23 period.
During the Jan-Sep’23 period, Third-party Logistic (3PL) players dominated leasing with a 45 pc share, followed by Engineering & Manufacturing (E&M) companies (15pc), Auto & ancillary (7pc), FMCG (6pc) and Electronics & electricals (5pc). Supply addition was registered at 28 mn. sq. ft recording a 57 pc Y-o-Y increase on Jan-Sep ’23.
A combined contribution of 56pc has been recorded in supply additions during the Jan-Sep’23 period from Delhi-NCR, Chennai, and Kolkata collectively.
In Jul-Sep’23, among the cities, Chennai recorded the highest absorption with 2.1 mn. sq. ft., followed by Bangalore and Mumbai, recording 1.7 mn. sq. ft. and 1.3 mn. sq. ft., respectively. The combined leasing share of these three cities accounted for approximately 62 pc. During the Jul-Sep’23 quarter, 3PL players accounted for 50pc of the leasing activity, followed by Engineering & Manufacturing at 13 pc, and Electronics & Electrical companies at 8 pc.
As per the regional trends, domestic corporations took the lead in leasing activities with a 59 pc share, followed by EMEA corporations at 25 pc and APAC corporations at 12pc during the same period. The I&L sector also witnessed a 92 pc Y-o-Y increase and 12 pc Q-o-Q growth in warehouse completions in the July-Sep’23 quarter.
“We are witnessing a remarkable shift in the I&L sector. With the surge in quality supply additions, robust festive demand, and the completion of pent-up projects, we anticipate the overall absorption to touch a 5-year high, reaching an impressive 36-38 million square feet by the end of 2023. Moreover, the active participation of larger developers backed by institutional funds, contributing around 40% to the completed projects, underscores the sector’s growth potential.
In select micro-markets, the prospect of rising rents is bolstered by the premium commanded by new, investment-grade, technologically advanced, and strategically situated assets,” Company Chairman & CEO Anshuman Magazine said.
