Growth in the retail sector increase the demand for warehouses
The growth of the retail and the e-commerce sector is directly proportional to the demand in warehouses. Demand for warehousing is estimated to grow at 9 % per annum over the next five years and would require investments of up to Rs 16,000 crore each year till 2019.
The chief economist and head of research Samantak Das of realty brokerage firm Knight Frank explained that due to the anticipated policy changes like the Goods and Services Tax, the estimated demand for warehousing will grow at a CAGR (compound annual growth rate) of 9 % or 104 million square feet per year.
Das also mentioned that a cumulative 520 million square feet of space, over and above the already existing 919 million square feet will be required over the next five years.Showing the calculations in his report, he mentioned that taking an average of around Rs 1,600 per square feet which is needed for purchasing the land parcel and building the premises, the total investment which the sector will require will go up to Rs 16,000 crore per annum.
Since now many big e-tailers like Amazon, E-bay, Flipkart, Myntra, Jabong, Homeshop 18 etc. are reporting good sales, they need space to warehouse their products. And since these companies directly reach the buyers bypassing the retails units which are often franchisees, they need bigger warehouse space. Even Aditya Birla Group, Kishore Biyani Group, Reliance Group, Tata Croma Group all are speculating better consumer sentiments and increase in sale for consumer durables and retail products.
Source- The Economic Times
Aditya Birla Group, Amazon, CAGR, CAGR net expansion, Compound Annual Growth Rate (CAGR), E-bay, Flipkart, Homeshop 18, Jabong, Kishore Biyani Group, Myntra, Reliance group, Tata Croma Group
