Tier II, III cities to emerge as preferred destinations for the warehousing industry as smaller cities gaining traction
At
a time when the Indian economy has been facing a slowdown, the
warehousing segment has emerged as a promising investment opportunity
for investors. Restricted movement due to the nationwide lockdown has
underscored the importance of in-city warehousing, with tier II and III
locations emerging as preferred investment destinations. Though the
supply of new warehousing space in 2021 could be merely 12 million sq ft
as against the previous estimate of 45 million sq ft due to the
COVID-19 crisis, in the long-term, the demand for warehousing space will
grow significantly and there will be capacity addition in almost 30-35
new tier II and III cities.
These
markets are still at a nascent stage and are contributing around 13
percent to overall warehousing demand however recorded a tremendous
growth rate of 20 percent in FY-2021. The fastest-growing E-commerce
market has undoubtedly increased the demand for warehousing in various
cities. Moreover, the e-commerce market, which has witnessed strong
growth in the last few years, is estimated to be at 70 billion dollars
in 2019 and is forecasted to reach over 160 billion dollars by 2022 with
strong investment opportunities in tier II & III cities.