Nagpur yet to make its mark on State’s warehousing map: Report
| Date :20-Jun-2019 |
Business Bureau:
Knight Frank has launched on Wednesday it’s “India Warehousing Report 2019”. Knight Frank, the independent global property consultancy in association with REED Exhibitions India is participating in the region’s largest warehousing expo the “9th India Warehousing Show 2019”. As a part of this association, Knight Frank launches the latest edition of its flagship report, India Warehousing Market 2019 to give perspective on the scale and growth of the warehousing market in India. According to the report, top warehousing markets in India witness a growth of 77 per cent year-on-year in leasing in April 2018–March 2019. Total requirement of storage space in the Indian manufacturing sector accounts for 80% of the warehousing market today.
The 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. The report notes that logistics cost in India accounts for 13%-14% of the Gross Domestic Product (GDP) which is substantially higher than the (8-10%) logistics cost to GDP ratio in other developed countries.
The primary reason for this is the skewed multi-modal mix and the fact that 60% of freight movement in India happens via roadways. Notes of Nagpur from the report: n Nagpur has the third largest population base in Maharashtra and is centrally located from major consumption markets. Popular for being an Orange City and food manufacturing hub, Nagpur is yet to make its mark on the state’s warehousing map. n Despite its strategic location, the major consumption markets such as Delhi, Mumbai, Kolkata, Bengaluru and Chennai are very far away from Nagpur (nearly 800-1000 kms). Tier II and III cities near Nagpur, such as Raipur, Jabalpur, Bhopal, Bhilai and Indore fare far below in the pecking order from a consumption perspective.
Hence, Nagpur’s evolution as a warehousing hub remains uncertain due to lack of proximity to a major consumption center. While it is still premature to write off Nagpur, its warehousing clusters are not getting organized as fast as what is prevalent in other cities post the Goods and Services Tax (GST) implementation. n The Multi modal International Cargo Hub and Airport at Nagpur (MIHAN) project, due to its sheer size of economic development, is expected to attract a lot of investments and land allotment to various business conglomerates for both the Special Economic Zone (SEZ) and the non SEZ area is currently underway.
This project is set to transform Nagpur into a major cargo hub. The SEZ area in MIHAN will be the one of its kind with the largest multi-product SEZ in India spread across 1,472 hectares. The manufacturing industry units will include multiple industries from sectors like food processing, pharmaceuticals and textiles.
The large-scale concentration of industrial activity in this region is bound to give a fillip to quality warehouse developments in the vicinity. n For the growth of an organized warehousing market, erstwhile industrial suburbs developed by Maharashtra Industrial Development Corporation (MIDC) such as Butibori and Hingna have a major role to play. Both these micro markets account for majority of the city’s industrial activity and large warehousing and logistics park have come up in and around them. Gumgaon, Waddhamana, Hingna Road, Hingna MIDC area, Kotewada and Kamleswar are some upcoming warehousing locations. n Gumgaon, a surrounding district of Butibori, is home to Orange City Logistics Park which is in close proximity to the Mumbai-Kolkata Highway. This huge warehousing facility is ideally located to meet the upcoming warehousing requirements of large companies which will eventually set footprint in MIHAN. The report also observed that the warehousing sector has attracted around USD 6.8 billion (approximately Rs 47,385 crore) funds since 2014 from institutional investors and developers amid rising demand for logistic spaces from manufacturing and e-commerce players post implementation of GST, according to Knight Frank. “The warehousing industry has witnessed massive participation from institutional investors, as well as developers, who have collectively invested over USD 6.8 billion since 2014, with an average investment per deal of USD 282 million,” Knight Frank said.