M A RK ET V I EW

India Industrial and Logistics Market View, H1 2018

Growth Continues; Close to

10 Mn. sq. ft. leased in H1 2018
Logistics Rent Up Logistics Rent Stable Absorption (Y-o-Y) Industrial Land Values
7 Markets 20 Markets UP UP – 2 Markets

*Arrows indicate change over H2 2017

POL I C Y ME AS U RE S DRI V E I NDI AN E C ONOMY
Figure 1: Gross Domestic Product (GDP) & Index of Industrial
B AC K ON TRAC K
Production (IIP)

The year 2018 has witnessed the Indian 9.0

7.3 7.7 7.7
economy’s return to growth following the 8.0 7.1 7.0 7.0
7.0 6.1 6.3
mitigation of hurdles that had impeded the 5.7
6.0
Indian economy’s growth last year. The quarter 5.0 4.1 4.3
3.8 3.7
3.37
ending March 2018 was especially positive from 4.0
3.0 2.1
an economic perspective as the country’s GDP 2.0 0.7
growth reached a two-year high of 7.7%, 1.0 -0.11 -0.3
0.0
compared with 7% in the previous quarter. The
-1.0
continued sturdy economic performance Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
prompted the government to raise its 2017-18 FY-16 FY-17 FY-18
growth rate by 0.1 percentage point to 6.7%. GDP IIP
However, the significant rise in input prices,
Source: MOSPI, CBRE Research, H1 2018.
sluggish manufacturing and power sectors, and
poor offtake of FMCG goods led to a decline in *IIP is an abstract number (with base 2004-05), the magnitude of which
the Index of Industrial Production (IIP) in May represents the status of production in the industrial sector for a given period of
time as compared to a reference period of time.
2018, dropping from 4.8% in April to 3.2% in
May. On the other hand, India’s manufacturing
The grant of infrastructure status to the logistics
sector activity reported its strongest growth this
and warehousing sector has also led to increased
year as the manufacturing PMI1 rose from 51.2 in
investor interest as it has helped developers gain
May to 53.1 in June, on the back of growing
access to infrastructure lending at easier terms
domestic and export orders.
and with enhanced limits. Further, the
government has set up the National Investment
Meanwhile, the logistics sector benefitted from
and Infrastructure Fund (NIIF) in partnership
the ablation of the short-term pain inflicted by
with certain domestic and international
the implementation of the Goods and Services
investors as a quasi-sovereign wealth fund with a
Tax (GST) subsided. Since GST has made doing
corpus of INR 0.4 trillion, with an eye on
business in India tax neutral, logistics players are
infrastructure improvement. The fund is
no longer making decisions based on the
involved in infrastructure investments, fund
comparative tax advantages offered by various
management and operations and was formed
states, but based on supply chain dynamics. The
with an aim to mobilise funds for infrastructure
implementation of GST has also helped remove
financing companies, thereby giving a boost to
inter-state checkpoints and reduce the
the logistics sector.
movement time of cargo, thereby reducing
sources of capital.
1PMI – Purchasing Managers Index – is an indicator of business activity in the manufacturing and service sector. It is marked within 1 to 100; 50 is considered

as the mid-point. Below 50 denotes contraction and above 50 indicates expansion; higher the difference from mid-point greater the expansion or contraction

H1 2018 CBRE Research © 2018, CBRE, Inc | 1

 M A RK ET V I EW INDIA INDUSTRIAL AND LOGISTICS
The government's plan to develop a National
Logistics Information Portal – a single online
window to link seven ministries such as railways,
highways and civil aviation under one portal will
also assist various stakeholders in the logistics
industry significantly.
In addition, government initiatives such as Make
in India and relaxation of FDI norms have had a
positive impact on investment sentiment in the
country, leading to heightened business activity
across the logistics sector. The government has
further increased the attractiveness of this sector
by proposing to develop 35 multimodal logistics
parks (MMLPs) in the country, with an intention
to ease freight movement and reduce transport
costs. Another step in this direction has been the
recent initiative of increasing the load capacity of
heavy vehicles by 20-25%, which is now at par
with global standards. This revision by the
Transport Ministry is likely to reduce logistics
costs by 2% and was done after considering the
advancements in automobile technology and
improvements in road quality.
Further, as part of its Integrated Industrial Area
(IIA) policy reforms, Maharashtra has taken some
concrete steps to stimulate private partnerships
for industrial developments. These include
increasing the FSI from 1 to 2, incentivizing
stamp duty, reducing minimum land
requirement from 40 hectares to 20 hectares and
revising the land use ratio (industrial: others)
from 60:40 to 80:20. These steps will go a long
way in promoting MSME enterprises.
Maharashtra has also introduced an integrated
logistics policy, which revolves around setting up
about 120 logistics parks across the state under
the supervision of the Maharashtra Industrial
Development Corporation (MIDC). Under this
policy, developments spanning 5 acres or more
and accessible through a 15-meter-wide road can
be termed integrated logistics parks. These parks
will have multi-functional storage facilities,
along with distribution, transportation, ancillary
support and trade facilitation services for
ensuring that they provide end-to-end logistical
support.
H1 2018 CBRE Research
RI S I NG I NV E S TME NT AND PRI V ATE PL AY E R
I NTERES T MADE THE S EC TOR MORE
ATTRAC TI V E
Government initiatives and the growing ease of
doing business in India has accelerated
investment activity in the logistics sector, with
several investors announcing plans to deploy
millions of dollars in either developing
warehousing projects or acquiring existing
assets. For instance, Hindustan Infralog Private
Limited, a JV between global port operator DP
World and the NIIF, aims to invest up to USD 3
billion in the port, logistics and related sectors;
as a part of this strategy, it has acquired a 90%
stake in Continental Warehousing Corporation.
Warburg Pincus-backed logistics developer e-
Shang Redwood is expected to enter the Indian
market in end-August by launching several
industrial parks in Mumbai, Pune, Kolkata and
Hyderabad. It aims to develop industrial parks
spanning close to 5 million sq. ft. by 2020.
Another investment firm, Singapore-based
Temasek, has developed a platform worth INR
2,000 crore in partnership with Ascendas-
Singbridge to invest in logistics and industrial
real estate across India.
Other significant investments include Indospace
– Everstone investing close to USD 550 million
and Logos India raising about USD 400 million
from Ivanhoe Cambridge (a Canada-based
private equity fund) to develop logistics facilities
in the country. In addition, global investor
Morgan Stanley has formed an alliance with
India-based KSH International to promote and
develop logistics centres across various cities.
Meanwhile, India-based Allcargo Logistics is
reportedly in talks with investors to raise INR
1,000 crore to set up a warehousing/logistics park
platform. Further, TVS Infra, NDR Logistics,
Hiranandani Group and Embassy Group
amongst others are some of the key domestic
players that are aggressively focusing on
expanding their logistical footprint in the
country.
© 2018, CBRE, Inc | 2
 M A RK ET V I EW INDIA INDUSTRIAL AND LOGISTICS
Growing interest from domestic and
international players, backed by other factors,
have prompted rating agency ICRA to maintain a
stable outlook for the logistics sector and peg its
medium-term growth at 8-10%.
TRAC TI ON I N DE MAND B OOS TE D L E AS I NG
AC TI V I TY S I G NI F I C ANTL Y I N H1 2 0 1 8
Transaction activity continued to gain strength in
H1 2018 as close to 10 million sq. ft. of space was
leased across seven cities, an increase of about
45% compared with H1 2017. The number is
higher than the 9 million sq. ft. of leasing
recorded in the entire 2015. Owing to
government initiatives, the growth of leasing
activity has remained in the 20-24% range on a
yearly basis since 2015.
Figure 2: Demand movement in Past 3 Years (Pre and Post GST Era)
12
10
Pre - GST
8
million sq. ft.
0
H1 H2
2015
Leasing activity in the review period was
primarily driven by consolidation and expansion
initiatives of firms belonging to sectors such as e-
commerce, 3PL, retail, and engineering and
manufacturing, which together accounted for
more than 75% of the leasing reported during
the review period. The cities of Bangalore (32%),
Mumbai (25%) and Delhi-NCR (20%) remained
the preferred destinations for the primary
occupants during the period (e-commerce, 3PL
and retail). The demand for large-sized spaces
(exceeding 200,000 sq. ft.) continued to gain
traction and remained almost stable when
compared to previous review period.
H1 2018 CBRE Research
Further, the average size of space take-up
increased from approximately 75,000 sq. ft.
during H1 2017 to close to 90,000 sq. ft. during
H1 2018. Over the past two years, space take-up
by occupiers from sectors such as electronics and
e-commerce has increased phenomenally by
168% and 131%, respectively. 3PL (83%) and
FMCG (44%) occupiers also reported significant
growth in warehousing space take-up.
This take-up is expected to further increase in the
quarters to come as companies are increasingly
considering large warehousing options, owing to
continued consumer-led growth, increasing
purchasing power of occupiers and renewed
focus on reducing overall logistics cost. further,
the upcoming organized supply and proposed
Post - GST
H1 H2 H1 H2 H1
2016 2017 2018
developments by various players coupled with
end user demand, the average space requirement
across major cities has increased, the trend is
likely to continue in forthcoming quarters.
DE L HI -NC R, B ANG AL ORE AND MU MB AI
RE MAI NE D THE TOP DE MAND DRI V E RS
The overall demand for logistics and
warehousing space was largely concentrated in
Bangalore (25%), Delhi-NCR (21%) and Mumbai
(20%). Chennai and Hyderabad also reported
sizeable transaction activity, and accounted for
about 12% and 10% of the demand, respectively.
Smaller cities such as Kolkata, Ahmedabad and
Pune collectively held a 12% share.
© 2018, CBRE, Inc | 3
 M A RK ET V I EW INDIA INDUSTRIAL AND LOGISTICS

When compared on a half-yearly basis, Mumbai Figure 3: Segment Wise Leasing Activity
witnessed significant increase in absorption
activity, followed by Hyderabad and Pune. Other Others
10%
cities such as Delhi-NCR, Bangalore, Chennai,
FMCG
Kolkata and Ahmedabad posted a marginal drop. 5% E Commerce
30%
Electronics
Prominent deals closed during the period 6%
included Flipkart leasing 390,000 sq. ft. in
Engineering &
Bangalore, D’Mart taking up 300,000 sq. ft. in Manufacturing
Mumbai and Yusen Logistics occupying 250,000 8%

sq. ft. in Mumbai. Other major transactions

concluded during the period include Haier
Retail
leasing of about 256,000 sq. ft. in Pune and LG 14%
taking up nearly 200,000 sq. ft. in Delhi-NCR. 3PL
27%

RE NTAL APPRE C I ATI ON WI TNE S S E D AC ROS S Others include companies from Telecom, Automobile, F&B and FMCG industry

V ARI OU S MI C RO MARK ETS Source: CBRE Research, H1 2018.

Rentals continued to appreciate along several

Figure 4: City Wise Leasing Activity
micro markets across the cities. The micro-
markets of NH-6 in Kolkata and Bhiwandi in Ahmedabad
Pune
Mumbai reported the highest appreciation, 3% 1%
Kolkata
ranging between 15% and 24%. Meanwhile, Bangalore
8%
25%
other micro-markets such as NH-2 in Kolkata,
the Northern Corridor in Hyderabad, the Hyderabad
10%
Southern Corridor in Bangalore, NH-1 in Delhi-
NCR and Aslali in Ahmedabad reported a rental
appreciation of 3-5% on a half-yearly basis. The
increase could be attributed to sustained Chennai
12%
demand and regular enquiries from various
occupiers. Further, rentals across all other micro- NCR
markets in most of cities remained stable during 21%
Mumbai
the review period, except in Chennai’s Western 20%
belt, which witnessed a marginal 1-3% decline.
Source: CBRE Research, H1 2018.

Table 1: Major Logistics / Industrial Developments Across Leading Cities

Area (in Expected Date

Project / Developer Location City Type
acres) of Completion

Apeejay Logistics Park Ballabhgarh Delhi-NCR Logistics 50 2018

IndoSpace Logistics Park Gurgaon Delhi-NCR Logistics 35 2018
BGR Logistics Bhiwandi Mumbai Logistics 100 2018
Local Developer Dobaspet/Western Corridor Bangalore Logistics 40 2018
ANCON Group Adibatla/ Southern Corridor Hyderabad Logistics 22 2018
Multicoating Technologies Pvt. Ltd Old Delhi Road, NH-2 Kolkata Logistics 1.5 2018
Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 4

 M A RK ET V I EW NATIONAL CAPITAL REGION (NCR)

MARK ET S U MMARY Figure 5: Rental Value Movement

Delhi-NCR reported strong demand for 50

warehousing space during the first half of 2018, 45

as leasing activity grew by about 80% in 40

comparison with H2 2017. Leasing activity was 35

largely driven by occupants from the e-commerce 30

(INR / sq. ft. / month)

(36%) and 3PL (21%) sectors, followed by retail 25
(13%), and engineering and manufacturing (7%) 20
corporates. Small-to-medium-sized transactions 15
comprised a majority of the concluded deals in 10
modern pre-engineered buildings (PEB) in areas 5
such as Taru Road in Gurgaon and Murthal on 0
NH-1. Delhi also reported the conclusion of H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
several small-sized transactions during the Delhi Gurgaon/(NH-8)
review period. Kundli/Murthal/Akbarpur (NH-1) Ghaziabad (NH-24, 58,91)

Source: CBRE Research, H1 2018.

A few notable transactions during the review
period included Miniso leasing about 176,000 sq.
ft. in Luhari, Unicharm taking up about 175,000
Table 2: Selected Leading Transactions
sq. ft. in Dharuhera, and VRL occupying about
150,000 sq. ft. in Taru Road.
Size (sq.
Property Location Tenant
ft.)
Rental values in the NH-1 micro-market
appreciated marginally by about 4%, owing to Independent
Luhari 176,600 Miniso
Development
increasing demand in the micro market.
However, rentals in other micro markets Independent
Dharuhera 175,000 Unicharm
Development
remained stable.
Independent
Manesar 150,000 VRL
Development

Source: CBRE Research, H1 2018.

Table 3: Sub-market Key Stats

Rental Values in H1 Rental Values in H2

Half Yearly Y-O-Y
Micro-Market 2018 (INR / sq. ft. / 2017 (INR / sq. ft. /
Change (%) Change (%)
month) month)

Delhi 38-52 38-52 0.0 3.0

Gurgaon/(NH-8) 15-22 15-22 0.0 0.0

Kundli/Murthal/Akbarpur (NH-1) 11-16 11-15 3.8 3.8

Ghaziabad (NH-24, 58,91) 17-21 17-21 0.0 0.0

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 5

 M A RK ET V I EW MUMBAI

MARK ET S U MMARY Figure 6: Rental Value Movement

Mumbai reported strong demand for

warehousing space during the first half of 2018, 25
as leasing activity grew exponentially. 3PL
players dominated leasing activity with a 54% 20
share, followed by e-commerce (17%) and retail

(INR / sq. ft. / month)

(16%) occupiers. Leasing activity was 15
concentrated in Warehousing parks such as New
Era, BGR Logistics and Antariksh Logitech.
10
Demand for industrial space also increased,
with leasing activity remaining concentrated in
5
Navi Mumbai.

0
Prominent transactions included 3PL
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
companies Kuehne Nagel and Yusen Logistics
taking up 300,000 sq. ft. and 250,000 sq. ft., Bhiwandi (NH - 3) Panvel (NH - 4 & NH - 17)
respectively, in Bhiwandi, along with Spear Source: CBRE Research, H1 2018.
Logistics leasing 300,000 sq. ft. in Patalganga.
Demand for industrial space was led by
Table 4: Selected Leading Transactions
Lindstrom Services, Selec Controls and Lizer
Technologies Ltd., which occupied about 20,000
Size
sq. ft., 25,000 sq. ft., and 36,000 sq. ft. Property Location (sq. Tenant
respectively at TTC, MIDC (Navi Mumbai). ft.)

Antariksh Logitech Bhiwandi 300,000 D’Mart

The city witnessed the launch of new
investment-grade projects spanning BGR Logistics Bhiwandi 300,000 Kuehne Nagel
approximately 9.8 million sq. ft. during the
BGR Logistics Bhiwandi 250,000 Yusen Logistics
review period.
New Era Patalganga 200,000 Flipkart

Growing enquiries for quality space, especially

Source: CBRE Research, H1 2018.
for Bhiwandi, led to a 22-24% rental
appreciation during the review period. However,
rental values across Panvel remained stable.

Table 5: Sub-market Key Stats

Rental Values in H1 2018 Rental Values in H2 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

Bhiwandi (NH-3) 17 – 20 12 – 18 23.3 23.3

Panvel (NH - 4 & NH - 17) 20 – 25 20 – 25 0.0 0.0

TTC – MIDC (Industrial) 35 – 45 30 – 40 14.2 14.2

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 6

 M A RK ET V I EW BANGALORE

MARK ET S U MMARY Rental values remained largely stable across

North, East and West Bangalore while it
Leasing activity in Bangalore remained the same increased by 5% in South Bangalore.
during the first half of 2018, as compared to the
second half of 2017. While leasing activity was
largely concentrated in South Bangalore
(followed by East Bangalore and West Bangalore),
North Bangalore reported almost negligible Figure 7: Rental Value Movement
transactions owing to the limited availability of
25
quality warehousing spaces. Leasing activity was
largely dominated by e-commerce players
followed by 3PL, fashion retail and FMCG 20

companies.
15

(INR / sq. ft. / month)

At the micro-market level, South Bangalore led
the leasing activity, accounting for about 59% of 10
the total transacted space, due to conclusion of
few large sized transactions. It was followed by
5
East Bangalore (22%), with multiple mid-size
transactions and West Bangalore (19%). E-
commerce players led the leasing activity with an 0
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
about 50% share, followed by 3PL (about 23%)
and fashion retail (about 22%) companies. North Corridor East Corridor West Corridor South Corridor

Source: CBRE Research, H1 2018.

A few notable transactions concluded in H1 2018
include TVS Logistics occupying about 200,000
sq. ft. and DHL occupying about 175,000 sq. ft. in
South Bangalore. Demand in East Bangalore was
Table 6: Selected Leading Transactions
led by Flipkart which leased about 170,000 sq. ft.
and Reliance renting about 120,000 sq. ft. In Size (sq.
Property Location Tenant
West Bangalore, demand was driven by Reliance ft.)
Retail leasing about 442,000 sq. ft. Independent Dobbaspet, T
442,000 Reliance Retail
building Begur
Independent
The city did not witness any new supply addition Hosur 200,000 TVS Logistics
building
during the review period. However, limited Independent
Attibele 175,000 DHL
quality supply and sustained demand in recent building
past is indicating towards supply influx in short Source: CBRE Research, H1 2018.
to medium term.

Table 7: Sub-market Key Stats

Rental Values in H1 2018 Rental Values in H2 2017 Half Yearly Y-O-Y
Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)
North Corridor 16-28 16-28 0.0 0.0
East Corridor 17-22 17-22 0.0 0.0
West Corridor 12-17 12-17 0.0 0.0
South Corridor 18-22 16-22 5.3 5.3
Source: CBRE Research, H1 2018

H1 2018 CBRE Research © 2018, CBRE, Inc | 7

 M A RK ET V I EW CHENNAI

MARK ET S U MMARY
Chennai continued to witness robust leasing
activity during the first half of 2018, with the
closure of several medium-to-large-sized
transactions. Leasing activity was largely driven
by automobile (23%), FMCG (17%), and e-
commerce (14%) companies, followed by 3PL
(9%) and engineering and manufacturing
players. Apart from logistics, Chennai is also a
preferred city for long term Industries,
considering the supply from recognized
Industrial parks supported by superlative
connectivity to national highway and port. With
the collective demand from Industrial and
logistics occupants, various developers are
evaluating the opportunity of setting up
industrial parks (approximately 100 + acres).
The city also witnessed the entry of about 0.3
million sq. ft. of supply with the addition of two
medium-scale warehousing developments. A
majority of this supply addition was witnessed in
West Chennai.
Rental values, largely in West Chennai, dipped
marginally due to supply influx. However, rental
values in the Southern and Northern industrial
belts remained stable.
Figure 8: Rental Value Movement
30
25
20
(INR / sq. ft. / month) 15

Leasing activity in the Western Industrial Belt

10
dominated warehousing activity, by contributing
more than 60% of overall leasing. Occupiers 5
from the e-commerce, auto ancillary, and
engineering & manufacturing segments 0
preferred independent developments in the H1 2016 H2 2016 H1 2017 H2 2017 H1 2018

micro-market. The Northern Industrial Belt Western Belt Northern Belt Southern Belt
accounted for about 30% of the leasing activity
Source: CBRE Research, H1 2018.
during the review period, driven by electronics
and FMCG occupiers. The Southern Industrial
belt reported moderate leasing activity and held
Table 8: Selected Leading Transactions
a share of about 7% in overall leasing, mostly led
by auto ancillary occupants. Size (in
Property Location Tenant
sq. ft.)
Notable transactions included Butterfly Independent Butterfly
Periyapalayam 123,000
Appliances leasing about 123,000 sq. ft., Development Appliances
Paishing Packaging taking up about 60,000 sq. ft. Top Run
Casa Grande Mappedu 120,000
Auto
and Flyjac renting about 50,000 sq. ft. in North
Chennai; as well as Top Run Auto occupying Indospace Vallam 100,000 SV Global
about 120,000 sq. ft., SV Global leasing about
100,000 sq. ft. and Bharat Benz taking up about Source: CBRE Research, H1 2018.
70,000 sq. ft. in West Chennai. In addition, South
Chennai witnessed the take-up of about 70,000
sq. ft. by Magna Automotive in Mahindra World
City.

H1 2018 CBRE Research © 2018, CBRE, Inc | 8

 M A RK ET V I EW CHENNAI

Table 9: Sub-market Key Stats

Rental Values in H1 2018 Rental Values in H2 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

Western belt -- Sriperambadur,

Oragadam, and 20 – 25 20 – 26 -2.2 -2.2
Irrungatukottai

North Chennai (Manali, Red-

11 – 17 11 – 17 0.0 0.0
hills, Periyapalayam,Karanodai)

South - GST Rd. and OMR Rd. 25 – 32 25 – 32 0.0 -1.7

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 9

 M A RK ET V I EW HYDERABAD

MARK ET S U MMARY Figure 9: Rental Value Movement

18
Leasing activity in Hyderabad increased by about
25% during the first half of 2018, compared with 16

H2 2017. A majority of the leasing was 14

concentrated in the Northern Corridor (90%) and 12

INR/ sq. ft./ month

was primarily led by occupiers from the 3PL
10
(38%) and FMCG (18%) sectors, followed by
8
retail.
6

After the Northern Corridor, the Eastern Corridor 4

held the largest share in leasing activity, while 2
leasing in the Western and Southern corridors
0
remained negligible. However, both Western and H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
Southern micro-markets are increasingly
attracting interest from e-commerce and FMCG Northern Corridor Western Corridor Eastern Corridor Southern Corridor
players, owing to the availability of large-scale Source: CBRE Research, H1 2018.
developments. Also, various transactions in
different stages of discussion are likely to
Table 10: Selected Leading Transactions
conclude in forthcoming quarter.

Property Location Size (sq. ft.) Tenant

Notable transactions that were concluded during
the review period include Future Supply Chain Independent
and Delivery Express leasing about 130,000 sq. ft. Kandlakaya 130,000 Future Group
Development
and 114,000 sq. ft., respectively, in Kandlakaya,
followed by UPL Seeds taking up about 110,000 Independent Delivery
Kandlakaya 114,000
sq. ft. in Kistapur, which lies in the vicinity of the Development Express
Northern Corridor.
Independent
Kistapur 110,000 UPL Seeds
The city also witnessed space addition of about Development
0.6 million sq. ft. in the form of three medium- Source: CBRE Research, H1 2018.
sized developments in the Northern Corridor.

Rising leasing activity in the Northern corridor

and investment grade supply addition led to a
4% rental appreciation on a half-yearly basis.
However, rental values in other micro markets
remained largely stable..

Table 11: Sub-market Key Stats

Rental Values in H1 2018 Rental Values in H2 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

North Corridor 9.5 – 15 9.5 – 14 4.3 4.3

Western Corridor 8 – 12 8 – 12 0.0 5.3
Eastern Corridor 16 – 20 16 – 20 0.0 5.9
Southern Corridor 11 – 13 11 – 13 0.0 4.3

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 10

 M A RK ET V I EW PUNE

MARK ET S U MMARY Figure 10: Rental Value Movement

Leasing activity in Pune increased sharply by 26

about 70% during H1 2018, in comparison with 24

H2 2017. Small-to-medium-sized transactions
22
comprised a majority of the concluded deals,

(NR / sq. ft. / month)

which were primarily driven by occupiers from 20

the electronics (60%) followed by engineering 18

and manufacturing and automobile sectors
16
contributing about 12% each. Chakan in the
14
northern region remained the most preferred
micro-market among occupiers, although a 12
medium-sized transaction was concluded in a 10
prominent Grade-A development in Ranjangaon. H1 2016 H2 2016 H1 2017 H2 2017 H1 2018

Northern Region (Chakan-Talegaon) Eastern Region (Sanaswadi-Ranjangaon)

A few notable transactions during the review
Pimpri-Chinchwad
period included Haier leasing about 250,000 sq.
ft. in Ranjangaon as well as KSH Manufacturing Source: CBRE Research, H1 2018.
and Faurecia taking up about 50,000 sq. ft. each
in the Chakan industrial zone.
Table 12: Selected Leading Transactions
The city did not witness any development
Property Location Size (sq. ft.) Tenant
completion during the review period, although a
new project was launched in Chakan. Indospace Industrial
Rajangaon 250,000 Haier
Park
Rental values remained stable during the review Hyundai
KSH Distripark Chakan 60,000
period and were estimated in the range of INR 24 Construction
– 26 /sq. ft. /month at Chakan, INR 22 – 25/ sq. ft. KSH
/ month at Sanaswadi and Ranjangaon, INR 20 – KSH Distripark Chakan 50,000
Manufacturing
24/ sq. ft./ month at Chinchwad
Source: CBRE Research, H1 2018.

Table 13: Sub-market Key Stats

Rental Values in H2 2017 Rental Values in H1 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

Northern Region (Chakan-

24-26 24-26 0.0 0.0
Talegaon)
Eastern Region (Sanaswadi-
22-25 22-25 0.0 0.0
Ranjangaon)

Pimpri-Chinchwad 20-24 20-24 0.0 0.0

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 11

 M A RK ET V I EW KOLKATA

MARK ET S U MMARY Figure 11: Rental Value Movement

25
Kolkata witnessed a marginal increase in
demand as close to 0.8 million sq. ft. of space
20
was leased in H1 2018. The Dhulagarh micro-
market along NH-6 accounted for about 65% of
the leasing, followed by Dankuni at 54%. 15

(INR / sq. ft. / month)

Occupiers from the engineering and
manufacturing (16%), e-commerce (61%) 10
primarily led demand followed by 3PL players.
5
A few notable transactions during the review
period included Flipkart and Great Eastern
0
Appliances leasing about 256,000 sq. ft. and H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
70,000 sq. ft., respectively, in Sankrail Industrial
NH - 2 (Dankuni, Old Delhi Road)) NH - 6 (Dhulagarh,Sankrial,Uluberia)
Park, NH6; Philips India taking up about 80,000
sq. ft. on NH-6; and Delhivery and Lifestyle Taratala - – Budge Budge Trunk Road

International occupying about 52,000 sq. ft. and Source: CBRE Research, H1 2018.
50,000 sq. ft., respectively, in an independent
development on NH-2.
Table 14: Selected Leading Transactions
During the review period, nearly 0.35 million sq.
Size (in
ft. of warehousing space was added in the form Property Location Tenant
sq. ft.)
of four medium-sized developments on NH-6 and
Sankrail
Dankuni (Old Delhi Road). NH – 6 256,000 Flipkart India
Industrial Park
Independent
The NH-2 and NH-6 micro-markets witnessed NH – 6 80,000 Philips India
Development
rental appreciation of about 8% and 16%, Sankrail Great Eastern
NH – 6 70,000
respectively, on a half-yearly basis due to limited Industrial Park Appliances
availability of space. However, rentals in the
Source: CBRE Research, H1 2018.
Taratala micro-market remained stable.

Table 15: Sub-market Key Stats

Rental Values in H1 2018 Rental Values in H2 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

NH - 2 (Dankuni, Old Delhi

18-24 16-24 7.7 7.7
Road)
NH - 6 (Dhulagarh, Sankrial,
17-20 15-17 15.6 15.6
Uluberia)
Taratala - – Budge Budge
17-24 17-24 0.0 0.0
Trunk Road

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 12

 M A RK ET V I EW AHMEDABAD

MARK ET S U MMARY Figure 12: Rental Value Movement

Leasing activity in Ahmedabad declined during 20

H1 2018, as compared with H2 2017. The micro- 18
markets of Bakrol and Changodar led leasing 16
activity and continued to be preferred locations 14
for warehousing activity. Engineering and 12
manufacturing firms accounted for a majority of

I(NR / sq. ft./ month)

10
the warehousing space take-up. 8
6
A few notable transactions during the review 4
period include Asian Paints leasing 2
approximately 75,000 sq. ft. at Changodar and 0
Apollo Tyres taking up 15,000 sq. ft. at Bakrol. H1 2016 H2 2016 H1 2017 H2 2017 H1 2018

Changodar Sanand Aslali Aslali Extension (Kheda)

During the review period, the city witnessed the
launch of several medium-to-large-sized Source: CBRE Research, H1 2018.
developments, spanning a total of 3 million sq.
ft., which are now at various stages of Table 16: Selected Leading Transactions
construction. A majority of these launches were
witnessed in Naviyani and Changodar
Size (in
Property Location Tenant
sq. ft.)
Rental values remained largely stable across all
micro-markets. Titanium
Changodar 75,000 Asian Paints
Logistics Park
Naseeb
Bakrol 15,000 Apollo Tyres
Warehouse
Source: CBRE Research, H1 2018.

Table 17: Sub-market Key Stats

Rental Values in H2 2017 Rental Values in H1 2017 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

Changodar 16-20 16-20 0.0 0.0

Narol 18-20 18-20 0.0 0.0
Sanand 16-18 16-18 0.0 0.0
Aslali 16-20 15-20 2.9 2.9

Aslali Extension (Bareja) 10-14 10-14 0.0 0.0

Source: CBRE Research, H1 2018.

H1 2018 CBRE Research © 2018, CBRE, Inc | 13

 M A RK ET V I EW OUTLOOK
Leasing activity is likely to remain upbeat in this
sector over the next six months. In the short to
medium term, 3PL and e-commerce players are
expected to drive the demand for warehousing
space. Most of this demand is expected to be
concentrated in large urban centres, with
Gurgaon in Delhi-NCR, Aslali and Changodar in
Ahmedabad, Bhiwandi in Mumbai, the Eastern
and Western Corridors in Bangalore, the
Northern Corridor in Hyderabad and the
Western Belt in Chennai likely to remain
preferred destinations for occupiers.
G OV ERNMENT I NI TI ATI V ES TO B OOS T
L OG I S TI C S AND WARE HOU S I NG S E C TOR
According to the economic survey 2017-18, the
Indian logistics sector employs 22 million people
and improvements in the sector can result in a
10% reduction in indirect costs, leading to a 5-
8% growth in exports. The survey also estimates
that the worth of the Indian logistics sector
would be USD 215 billion by 2020, from the
current USD 160 billion. This growth is likely to
be on the back of various government incentives
to spur the logistics sector as well as the GST.
The creation of a separate Logistics Department
under the ministry of commerce in July 2017 is a
reiteration of the government’s focus on the
development of the sector. A National Integrated
Logistics Policy is also being formulated by the
ministry as a part of a comprehensive plan to
boost business and exports. The commerce
ministry has also announced its plan for a Cargo
Policy, which will be the first time that India will
have a policy on the carriage of goods. Another
key initiative by the government has been The
Logistics Ease Across Different States (LEADS)
Index, which was unveiled in January 2018 and is
a composite indicator to assess international
trade logistics across states and union territories.
It is based on a stakeholders’ survey conducted
by Deloitte for the ministry of commerce and
industry. The index which ranks different states
on the logistics sector in each of these states,
currently considers Gujarat, Punjab and Andhra
Pradesh as the top three states in terms of
logistics ease.
H1 2018 CBRE Research
TE C H I NNOV ATI ON TO S HAPE THE F U TU RE OF
THE S E C TOR
Indian e-commerce companies, 3PL players and
online grocery chains are increasingly using
innovative tech solutions to improve inventory
management. The use of fleet management
software (provides live tracking of goods), RFID
systems for inventory identification and
automated pallet storage is growing quickly, as is
the number of start-ups aimed at bridging the
technology gap. The widespread deployment of
IoT is expected to revolutionize operations by
creating smart warehouses that improve supply
chain efficiencies. While the initial green shoots
of these initiatives have already started
appearing, their actual impact would only unfold
over the next couple of years.
MODERN WAREHOU S ES TO DRI V E DEMAND
As technology permeates the logistics sector and
the government push to the sector continues,
corporates across all sectors would be driven to
opt for large, modern warehouses as they seek to
leverage the new GST regime as well as
consolidate and expand their operations. This
demand would be further boosted by the entry of
various private equity firms and foreign players
in the Indian logistics market. As a result,
leading real estate developers have begun
acquiring large land parcels for the development
of warehousing facilities – a trend likely to
continue through 2018. This would lead to an
increase in the supply of modern warehouses
over the coming years. While cities such as
Mumbai, Pune and Chennai would remain major
investment destinations, Delhi-NCR and
Bangalore are also likely to be on the investors’
radar.
© 2018, CBRE, Inc | 14
 M A RK ET V I EW INDIA INDUSTRIAL AND LOGISTICS

CONTACTS

Abhinav Joshi Please visit the Global Research Gateway at

Head of Research, India CBRE www.cbre.com/research-and-reports.
+91 124 465 9700
abhinav.joshi@cbre.co.in

Chinmay Panda
Manager, India CBRE
+91 33 4019 0200
chinmay.panda@cbre.co.in

Ram Chandnani
Managing Director,
Advisory and Transaction Services, India
Ground Floor, Hulkul Brigade Centre,
No. 82 Lavelle Road, Bangalore 560 001
+91 80 407 40000
ram.chandnani@cbre.co.in

Jasmine Singh
Senior Executive Director
Industrial & Logistics Services, Advisory & Transaction Services , India CBRE
19th Floor, DLF Square, M Block,
Jarcanda Marg, DLF City Phase II,
Gurgaon 122 002
+91 124 465 9700
Jasmine.singh@cbre.co.in

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