Bearing demand in Bengaluru exceeds new supply by 55%: report

According to the report by India Sotheby’s International Realty, warehouse rentals in Bengaluru exceeded new supply by 55% in 2018-22, resulting in lower vacancy rates and an increase in rents.

Real estate consultant India Sotheby’s International Realty published a white paper “Ahead of The Curve – Bengaluru Warehousing” on Wednesday.

The IT city is likely to see an increase in investment in the development of a premium warehouse park to meet the growing demand for storage space from e-commerce and third-party logistics companies, the newspaper said.

The consultant provided input from real estate data research firm CRE Matrix for the white paper.

“The demand-supply trend over the past five calendar years (2018-22) shows that demand has far outstripped new supply, resulting in very low vacancy rates in existing storage parks and decent rental growth,” the consultant said.

Cumulative absorption of warehouse space in Bengaluru in 2018-22 was 16.34 million sq ft while new supply was 10.5 million sq ft.

“Bengaluru will be in the spotlight for investing in larger capacity warehouses for e-commerce processing. Due to the expected increase in demand, we anticipate that more than 250 hectares of land on the outskirts of Bengaluru city will be needed to develop new storage facilities,” said Gagan Randev, Executive Director – Capital Markets, India Sotheby’s International Realty.

In 2022, market rents saw a remarkable 10% increase, beating the 5-6% average rent increases of previous years.

“This uptrend indicates further tightening in the market. This gives owners the advantage of being able to negotiate more favorable rental conditions with new tenants. The significant increase in market rents of 10% compared to the actual rent increase of 2% in 2022 clearly reflects this positive trend,” said Harikesh Ananthamurthy, Senior Vice President – ​​Capital Markets, India Sotheby’s International Realty.

He said the manufacturing, logistics, e-commerce and retail sectors will continue to drive warehouse demand, with logistics companies and e-commerce proving to be the main users.

Randev said the involvement of larger organized players in the industry has spurred a shift towards automation, IoT integration, improved warehouse management systems, safety measures and a focus on creating greener and more sustainable environments.

Prominent players such as All Cargo, Welspun, IndoSpace, Prologis, Panattoni, RMZ, The House of Hiranandani, Lodha (Macrotech), ESR, CapitaLand, Morgan Stanley, Horizon Industrial Parks and Greenbase are aggressively expanding their presence in the storage segment. said the advisor.

The Sotheby’s International Realty network is present in 81 countries and territories with 1,075 offices and 26,000 sales representatives and has achieved a record $167 billion in global real estate sales.

India Sotheby’s International Realty established its presence by opening its first office in New Delhi in July 2014. The firm now has offices in Mumbai, Kolkata, Bengaluru, Goa, Colombo and the Maldives mandate. Its residential portfolio in India includes listings from luxury properties such as farmhouses, bungalows, villas, holiday homes to penthouses and apartments across the country.

The Company also provides commercial real estate advisory services, as well as advisory services for offices, institutions, retail, hotels and real estate transactions.

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