Warehousing in India is expected to have market of USD 55Billion by 2011

The Indian warehousing sector is poised to become a $55 billion by 2010-11 with around 45 million sq ft warehousing space expected to be developed in the country in next five years supplemented by around 110 logistics parks. According to a report by real estate consultancy firm Cushman and Wakefield, warehousing activities account for about 20 per cent of the total Indian logistics industry and offer tremendous growth potential. The warehousing segment of the logistics industry is estimated to grow from $20 billion in 2007-08 to about $55 billion by 2010-11, growing at the rate of 35-40 per cent every year.The entry of global third party logistics players is fast changing the model of logistics model in the country to more of a strategic function. Changing business dynamics and the entry of global third party logistics players has led to the re modeling  of the logistics services in India. "From a mere combination of transportation and storage services, logistics is fast emerging as a strategic function that involves end-to-end solutions that improve efficiencies. Around 45 million sq ft warehousing space is expected to be developed by various logistics companies which would further boost real estate activities in key locations across the country.

The total share of organised warehousing space is less than 8% of the total warehousing space in India. The industry is fragmented and largely un-organised and is dominated by small players with small capacities. The warehousing sector is also expected to positively impact on many global manufacturing majors wanting to make India a hub for skill intensive manufacturing given the abundant supply of well qualified engineers. Given the current shortage of quality warehousing space, rentals in some locations closer to the city have touched as high at Rs. 30 per sft per month. Organised retail in India grew from $16.99 billion in 2006-07 to $25.44 billion in 2007-08, a growth of 49.7 per cent with a potential to touch $45 billion by 2010. A number of warehousing companies have been steadily increasing their capacities over the last two years thanks to the retail boom across the country.

Private equity investments in Indian warehousing

As the traditionally active residential and commercial segments head for a slowdown, private equity funds are looking for new avenues to invest in real estate and they are now betting on Indian  warehousing and logistics sectors. This sector could see PE investments close to USD 1 billion dollars in the next three years.. Private equity funds are expected to pump in about 10-15% of their total investments in warehousing and logistics, over the next two years.

Kotak realty recently invested Rs 200 crore in a warehousing joint venture with a Delhi-based company the DRS Group. Saffron Asset Advisors plans to launch a warehousing fund around march next year, to which it will dedicate at least 10-15% of its total investments. Red Fort Capital,has allocated about USD 50 million for warehousing projects, which it will invest over the next one year. Gurgaon-based Fire Capital is also planning to launch a similar fund.