Knight Frank India’s flagship report titled ‘India Warehousing Market Report – 2023’ has assessed warehousing leasing across 8 primary markets and 17 other secondary markets in India. In the financial year 2022-23 (April 2022 – March 2023), the top 8 markets experienced a historic high in demand, reaching 51.3 million square feet (msf). The compound annual growth rate (CAGR) from FY17-23 has been 24%. Notably, Mumbai, Bengaluru, and Kolkata witnessed a historically high volume of transactions in FY23. The surge in activities from the Third-party logistics (3PL), manufacturing, and retail sectors has contributed to the increased demand for warehousing. Compared to the previous year, with the 3-PL sector leading the pack with a 34% year-on-year (YoY) growth. The manufacturing sector also experienced a significant rise in demand, with a 23% YoY growth. However, the e-commerce sector recorded a decline in demand in FY23, primarily due to early capacity building in recent years and a gradual shift towards flexibility.
The report -cited that Hyderabad recorded warehousing transactions of 5.1 mn sq ft in FY 2023, witnessing a marginal dip of 7% YoY compared to 5.4 mn sq. ft in FY 2022. However, despite the slight YoY decline in transaction volumes in the current analysis period, they are still higher than any previous period except FY 2022. The decline is mainly due to a temporary slowdown in transactions from 3PL and e-commerce occupiers. But this will not impact long-term demand prospects considering the popularity of online shopping and the need for last mile delivery is slated to continue.
We have appended the following documents for your perusal:
- Hyderabad specific Release
- National Press Release – Attached
- Report – Download Here
- Presentation – Attached
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Knight Frank India, an international property consultancy, in their latest report – ‘India Warehousing Market Report – 2023’, cited that Hyderabad recorded warehousing transactions of 5.1 mn sq ft in FY 2023, witnessing a marginal dip of 7% YoY compared to 5.4 mn sq. ft in FY 2022. However, despite the slight YoY decline in transaction volumes in the current analysis period, they are still higher than any previous period except FY 2022. The decline is mainly caused due to a temporary slowdown in transactions from 3PL and e-commerce occupiers. But this will not impact long-term demand prospects considering the popularity of online shopping and the need for last mile delivery is slated to continue.
WAREHOUSING TRANSACTIONS ACROSS TOP 8 INDIAN CITIES
| Warehouse leasing | FY 2023 | % Change | CAGR |
| City | in mn sq ft | FY 2023 YoY | FY 2017-23 |
| Mumbai | 9.5 | 10% | 35% |
| NCR | 8.6 | -5% | 20% |
| Bangalore | 7.4 | 25% | 34% |
| Pune | 7.4 | -2% | 24% |
| Kolkata | 5.1 | 18% | 25% |
| Hyderabad | 5.1 | -7% | 27% |
| Chennai | 4.5 | -11% | 16% |
| Ahmedabad | 3.8 | -29% | 14% |
| Total | 51.3 | 0% | 24% |
Source: Knight Frank Research
While the share of manufacturing sector companies has increased from 18% in FY 2022 to 39% in FY 2023, 3PL and e-commerce transactions have reduced significantly from 32% in FY 2022 to 21% in FY 2023, and from 28% in FY 2022 to 17% in FY 2023 respectively. The share percentage of FMCG and FMCD transactions have remained constant in both the financial years at 5% and 1% respectively, whilst the retail sector experienced a slight decline from 15% in FY 2022 to 14% in FY 2023.
INDUSTRY-SPLIT OF TRANSACTION VOLUME
Source: Knight Frank Research
Notes:
Warehousing transactions data includes light manufacturing/assembling
Other Sectors – These include all manufacturing sectors (automobile, electronics, pharmaceutical, etc.) except FMCG and FMCD
Miscellaneous – These include services such as telecom, real estate, document management, agricultural warehousing and publishing
The demand for warehousing continues to be dominant in the Medchal cluster, whose share has increased marginally from 60% in FY 2022 to 61% in FY 2023. The Shamshabad cluster and Patancheru cluster have observed almost the same trend in activity as compared with the previous year. The Shamshabad cluster witnessed a marginal decline in its share of transactions from 30% in FY 2022 to 27% in FY 2023. Notably, three of the top five transactions in the Hyderabad market occurred in the Shamshabad cluster during FY 2023. The Patancheru cluster experienced a marginal increase in its share of transactions from 10% in FY 2022 to 11% during FY 2023.
CLUSTER-SPLIT OF TRANSACTION
Source: Knight Frank Research
Warehousing demand from the manufacturing sector is slated to increase considering many of the sectors that have been granted approvals under the PLI scheme will be based out of Hyderabad, and many global players in the mobile phone manufacturing and auto-ancillary space have signed MOUs with the Telangana government. The temporary dip in transactions from 3PL and e-commerce occupiers will not impact long-term demand prospects considering the popularity of online shopping and the need for last mile delivery is slated to continue.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The warehousing market has experienced consistent growth, with transaction volumes exceeding the previous year’s figures, which were already the highest in history. This growth is not limited to the top eight markets but has also extended to secondary markets, supported by enhanced infrastructure such as highway networks, rail systems, and air transportation. Indeed, there has been a noticeable shift in the occupier groups within the warehousing market. Third-party logistics (3PL) providers and manufacturing companies have emerged as the primary players, indicating their increasing importance in the industry. As these occupiers take the lead, their evolving needs and preferences regarding warehousing requirements have become significant factors to consider. Occupiers have specific demands and expectations when it comes to warehousing facilities. They seek spaces that can accommodate their storage and distribution operations efficiently. Flexibility, scalability, and customization options are crucial for meeting their evolving needs.”
HYDERABAD: Land Rate and Rents
During FY 2023, land rates have increased significantly in the Shamshabad and Medchal clusters, whereas rentals have remained largely steady across locations in the three warehousing clusters.
| Warehouse cluster | Location | Land rate | Grade A | Grade B | |||||
| (INR mn/acre) | Rent in INR/sq m/month (INR/sq ft/month) | Rent in INR/sq m /month (INR/sq ft/month) | |||||||
| Medchal cluster | Medchal | 20 – 35 | 205 – 226 (19 – 21) | 183 – 205 (17 – 19) | |||||
| Devaryamjal – Gundlapochampally | 20 – 28 | 205 – 226 (19 – 21) | 183 – 205 (17 – 19) | ||||||
| Kandlakoya | 20 – 28 | 205 – 226 (19 – 21) | 183 – 205 (17 – 19) | ||||||
| Yellampet | 20 – 28 | 205 – 226 (19 – 21) | 183 – 205 (17 – 19) | ||||||
| Shamirpet | 20 – 28 | 205 – 215 (19 – 21) | 183 – 205 (17 – 19) | ||||||
| Patancheru cluster | Patancheru Industrial Area | 20 – 45 | 205 – 215 (19 – 20) | 183 – 205 (17 – 19) | |||||
| Rudraram | 19 – 45 | 205 – 215 (19 – 20) | 183 – 205 (17 – 19) | ||||||
| Pashamylaram | 19 – 45 | 205 – 215 (19 – 20) | 183 – 205 (17 – 19) | ||||||
| Edulanagulapally | 18 – 45 | 205 – 205 (19 – 19) | 172 – 194 (16 – 18) | ||||||
| Sulthanpur | 18 – 45 | 205 – 205 (19 – 19) | 172 – 194 (16 – 18) | ||||||
| Shamshabad cluster | Aerotropolis | 20 – 25 | 205 – 226 (19 – 21) | 172 – 194 (16 – 18) | |||||
| Srisailam Highway | 20 – 25 | 205 – 226 (19 – 21) | 172 – 194 (16 – 18) | ||||||
| Bongloor | 20 – 25 | 205 – 226 (19 – 21) | 172 – 194 (16 – 18) | ||||||
| Kothur | 20 – 25 | 205 – 226 (19 – 21) | 172 – 194 (16 – 18) | ||||||
| Shadnagar | 21 – 25 | 205 – 226 (19 – 21) | 172 – 194 (16 – 18) |
Source: Knight Frank Research
