MARKETVIEW

India Industrial and Logistics Market View, H2 2016

Leasing declined in H2 2016
as industry plans for the GST
Logistics Rent Up Logistics Rent Stable Absorption (Y-o-Y) Industrial Land Values
7 Markets 20 Markets UP Stable

*Arrows indicate change over H1 2016

T E P I D E C O NOMI C G R O W TH , M A N UF A C TU RI NG
Figure 1: Gross Domestic Product (GDP) & Index of Industrial
S E C TOR C O N TI NU E S T O E X P A ND
Production (IIP)
8.4
India’s economy grew by 7.3% during the second 9 7.6 7.9
7.5 7.5 7.2 7.3
8 7.1
quarter of 2016-17 to an estimated INR 29.63 6.7 6.6
7
trillion, as compared to a growth of 7.1% in the 6
4.4
previous quarter. Manufacturing was amongst 5 3.6
3.4
4
the leading sectors to record a healthy expansion 3
2.5
2.1 2.1
1.7
activity. This was also reflected in the Index of 2 0.7
1 0.1
Industrial Production (IIP) numbers for the
0 -1.3
month of November 2016. The IIP grew by 5.7% (1)
y-o-y, with the mining and manufacturing sectors (2)
growing by 3.9% and 5.5%, respectively. Out of Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

the twenty two industry groups in the FY-2014 FY-2015 FY-16

manufacturing sector, sixteen have witnessed GDP IIP

positive growth during the month of November
2016, as compared to the corresponding month
of the previous year. Consumer electronics
segment including radio, television and
communication equipment had the highest
positive growth of 32.2% followed by 23.2% in
the electrical machinery as well as the
automobile sector. Growth concerns which
followed post the demonetization were transient
as the headline Purchasing Managers’ Index
(PMI) rose to 50.4 in January 2017 from 49.6 in
December 2016, indicating an expansion in
manufacturing activity.
G O V E RN ME N T T O L E T I N F R A S TRU C UR E
D E V E L OPME N T T A K E P R E C E D ENC E
The government has been working towards
creating an inclusive and sustainable
development model for the country. Over the
past few quarters, it has initiated various policy
measures to promote transparency and ease of
doing business. Foreign direct investment (FDI)
Source: MOSPI, CBRE Research, H2 2016.
*IIP is an abstract number (with base 2004-05), the magnitude of which
represents the status of production in the industrial sector for a given period of
time as compared to a reference period of time.
norms across several sectors such as
pharmaceuticals, defense, and single brand
retail, amongst others were also relaxed to
encourage foreign participation. This has helped
to a large extent in enhancing India’s image as a
preferred destination for companies to establish
and expand their business. According to recent
estimates, India has emerged as the sixth largest
manufacturing hub in the world and is seen as
an engine of global growth1. However, the pace
of infrastructure development still remains a
major cause of concern. To address this issue,
the government has recognized investment in
infrastructure as one of the key drivers of
economic development.

1 Union Budget Speech, 2017-2018

H2 2016 CBRE Research © 2017, CBRE, Inc | 1

 M A R K E T V I E W INDIA INDUSTRIAL AND LOGISTICS

The National Institution for Transforming India Figure 2: Segment Wise Leasing Activity
(NITI) Aayog has projected an investment of INR Pharmaceutical
Others
3% Engineering
67 trillion in the infrastructure sector during the Retail 6%
4% and
Twelfth Five Year Plan (2012–2017). To enable Electronics Manufacturing
5% 29%
fast track growth, the government has set-up the
National Investment and Infrastructure Fund
E-commerce
(NIIF), as a quasi-sovereign wealth fund with a 8%
corpus of INR 0.4 trillion. Apart from the NIIF,
investments into infrastructure will be
supplemented by the Infrastructure Investment
Trusts. Collectively, they are expected to alleviate
FMCG
the burden on the banking system by making 22% 3PL
available long-term capital for the infrastructure 23%
sector and maximizing economic impact through Others include companies from Telecom, Media and the Chemical industry
infrastructure development. The government has Source: CBRE Research, H2 2016.
further allocated a total of INR 3.96 trillion - an
Figure 3: City Wise Leasing Activity
all-time high outlay - towards infrastructure
development in 2017-18. Hyderabad
9% Kolkata
Mumbai 21%
P O P U L I S T P O L I C Y M E A S U RE S T O D R I V E L O N G - 9%
T E R M G R O W TH I N T H E M A N U F AC TURI NG
S E C TOR

A renewed impetus to the manufacturing sector
and the ‘Make in India’ campaign has been
provided in the 2017-18 Budget. Following are
some of the major policy announcements to spur
growth in the sector.
 In order to make Micro Small and Medium
Enterprises (MSME) more viable, income tax
for companies with annual turnover up to
INR 0.5 billion has been reduced from 30% to
25%.
 To make India a global hub for electronics
manufacturing, an investment outlay of INR
7.45 billion for 2017-18 has been announced
across incentive schemes such as M-SIPS
(Modified Special Incentive Package Scheme)
and EDF (Electronics Development Fund).
 A specific programme for development of
multi-modal logistics parks, together with
multi modal transport facilities, will be drawn
and implemented.
 A new and restructured central scheme with a
focus on export infrastructure, namely, Trade
Infrastructure for Export Scheme (TIES) will
be launched in 2017-18.
Bangalore
12%
Chennai
20%
Pune
13%
NCR
16%
Source: CBRE Research, H2 2016.
K E Y S E C TOR S C O N TI NUE T O R E C OR D R O B U S T
G R O W TH
Foreign investments into the country have
grown exponentially in the past few years. Sectors
that drive demand for warehousing such as e-
Commerce, engineering and manufacturing, Fast
Moving Consumer Goods (FMCGs) and retail
amongst others, witnessed bulk of the foreign
investments. Few of the key milestones and
investment commitments across sectors during
2016 have been highlighted below.
• FDI in the electronic manufacturing sector
reached an all-time high of INR 1.23 trillion
(US$ 18.36 billion) in September 2016.
• Apple opened a product development center
in Hyderabad and will now set-up a
manufacturing facility in the country.

H2 2016 CBRE Research © 2017, CBRE, Inc | 2

 M A R K E T V I E W INDIA INDUSTRIAL AND LOGISTICS
 South Korea’s Kia Motors Corp. is in advance
discussions to set-up its first manufacturing
facility in the country in Andhra Pradesh.
 TATA Boeing Aerospace Limited (TBAL), a
joint venture between Boeing and Tata
Advanced Systems, has set-up a new facility in
Hyderabad to produce Boeing AH-64 Apache
helicopter fuselages and other aero
structures.
 Japan-based utility vehicle manufacturer,
Isuzu Motors, opened its INR 30 billion
greenfield manufacturing unit in Sri City,
Andhra Pradesh.
 Spanish wind turbine manufacturer Gamesa
inaugurated a new wind blade manufacturing
facility in Andhra Pradesh.
L E A S I NG G R O W TH C O N TI NUES I N 2 0 1 6 ,
D E M A N D P I C K S U P A C R O S S S M A L L ER C I T I ES
Demand for warehousing space continued to
remain strong during 2016. Slightly more than 10
million sq. ft. of space was leased across leading
cities. Companies from the engineering and
manufacturing sector and e-Commerce leased
22% of the total space transacted during 2016;
3PL companies at 21% and FMCG players at 17%
were the other major occupiers of space. In
anticipation of the Goods and Services Tax (GST),
few firms have deferred their investment
decisions which was also reflected in the y-o-y
sectorial space take-up. For instance, the share of
3PL companies declined from 31% in 2015 to
only 21% in 2016. While on the other hand,
driven by rising consumerism, the space take-up
by electronics retailers increased by 29% y-o-y
during the year 2016.
Another significant development in 2016 was the
increase in share of relatively smaller cities such
as Hyderabad, Chennai, Kolkata and Pune in the
overall space take-up. Collectively, these cities
leased 49% of the total space leased in 2016, as
compared to 25% during 2015. Engineering and
manufacturing companies (30%), 3PL players
(23%), e-Commerce firms (19%) and FMCG
companies (16%) emerged as the biggest
demand drivers across these smaller cities.
H2 2016 CBRE Research
L A C K L U S TE R H 2 2 0 1 6 A S C O M PANI ES A D O P T
A W A I T A N D W A T C H A P P R OAC H
Leasing activity during H2 2016 declined by 5%
when compared to the first half of the year.
Companies have deferred their investment
decision until clarity on key policy measures
such as the GST is ascertained. However, on a
yearly comparison, demand for warehousing
space has increased by 36% compared to H2
2015, indicating a strong confidence among
players on long term growth. The dominance of
small cities in the overall space take-up was
prominent during the second half of the year.
Space take-up was concentrated in Kolkata
(21%), followed by Chennai (20%). Pune
witnessed 13% of the total leasing activity, while
Hyderabad had a 9% share. Across the traditional
consumption hubs of the Delhi- NCR,
approximately 16% of the total leasing activity
was recorded; while Bangalore garnered a 12%
share and Mumbai witnessed only 9% of the total
space take-up.
Engineering and manufacturing companies
leased approximately 1.4 million sq. ft. of space
and were the leading drivers of demand during
H2 2016. Among notable transactions, German
automobile major BMW leased approximately
1,20,000 sq. ft. at Oragadam in Chennai, Pittie
Group leased 1,20,000 sq. ft. at NH-6, Kolkata
and Birla Tyres took-up 50,000 sq. ft. at
Kandlakoya in Hyderabad. Demand from FMCG
companies also remained strong and leasing
activity was observed from companies such as
Reckitt Benckiser (70,000 sq. ft.) and TTK
Prestige (50,000 sq. ft.) at Bommasandra in
Bangalore, Asian Paints (70,000 sq. ft.), TATA Salt
(52,000 sq. ft.) across the NH-2 in Kolkata,
Samsonite (80,000 sq. ft.) in the Western
Corridors of Chennai and by Maharaja Whiteline
(60,000 sq. ft.) at Murthal in Delhi- NCR.
Approximately 2,00,000 sq. ft. leased by
Decathalon and 1,55,000 sq. ft. leased by the US
based Iron Mountain at Gurgaon, DHL’s lease of
1,20,000 sq. ft. at Sriperumbudur and 1,10,000
sq. ft. leased by 3PL player 20 Cube Logistics at
Puchattipedu in Chennai were among the other
major transactions to be concluded during H2 2016.
© 2017, CBRE, Inc | 3
 M A R K E T V I E W INDIA INDUSTRIAL AND LOGISTICS

R E N TA L V A L U E S R E M A I N L A R G E L Y S T A B L E Similarly, rental values across locations in the

A C R O S S L O C A TI ONS
Rental values in the Western and Southern
Corridors of Bangalore remained largely stable;
however, the East Corridor witnessed a marginal
rental appreciation in the range of 2-3% when
compared to H1 2016. On the other hand, due to
scarcity of ready-to-move options, the Northern
Corridor of Bangalore witnessed rental
appreciation in the range of 22-23% on a half
yearly basis. In Chennai, rental values witnessed
a marginal decline in the Western Corridor as
developers were keen on reducing the existing
vacancy levels, on account of the large
anticipated supply in the next few months. Going
forward, the announcement of large scale
logistics parks by prominent developers such as
Embassy Group, Casa Grande, Motherson, etc. is
expected to further exert rental pressure on the
region.
South Chennai micro-market witnessed a
marginal decline of about 1 – 2 %, when
compared to H1 2016. However, rental values in
North Chennai which saw steady rental
corrections in the past two years remained stable.
Rental values across cities in the West also
remained steady. In Mumbai, rentals for Grade A
warehouses in Bhiwandi were estimated in the
range of INR 11 – 16 / sq. ft. / month, while in
Panvel they were largely stable in the range of
INR 20 – 25 / sq. ft. / month. The industrial hubs
of Sanaswadi and Ranjangaon in Pune which
observed healthy leasing activity recorded a
rental growth of 9 – 10% compared to H1 2016,
while values remained steady in Chakan,
Talegaon, Pimpri and Chinchwad. Similarly,
rental values in warehousing hubs in Gujarat
spread across locations such as Changodar,
Narol, Sanand, Odhav with the exception of Aslali
and Aslali Extension where values increased by 6
– 8% when compared to H1 2016 owing to strong
occupier interest.

Table 1: Major Logistics / Industrial Developments Across Leading Cities

Area (in Expected Date
Project / Developer Location City Type
acres) of Completion

Agsons Group Sonepat, NH-1 Delhi-NCR Logistics 30 2017

IndoSpace Khopoli Mumbai Logistics 17 2018
Local Developer Medchal Hyderabad Logistics 15 2017
Local Developer Medchal Hyderabad Logistics 8.5 2017
Shyam Sel & Power Limited Chamrail Kolkata Logistics 6 2017
Local Developer Old Delhi Road, NH-2 Kolkata Logistics 5 2017
Source: CBRE Research, H2 2016.

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 M A R K E T V I E W NATIONAL CAPITAL REGION (NCR)

M A R K E T S U M MA RY In other locations, prominent transactions

Delhi NCR saw close to 26% of the total leasing
activity during the year 2016. As India’s leading
urban center, bulk of the demand in the region
was consumption-led. Companies from the e-
Commerce sector (23%), FMCG (18%) and 3PL
(14%) were the major drivers of demand in the
region. Leasing activity was robust in H1 2016;
close to 1.7 million sq. ft. was leased across
modern Pre-engineered Buildings (PEB).
However, as seen across other major urban
centers, demand for warehousing space was
limited in H2 2016, as only 800,000 sq. ft. of
transaction activity was recorded. Majority of the
leasing activity was concentrated across PEB
structures along the NH-8 in Gurgaon.
included the 60,000 sq. ft. space take-up by
Maharaja Whiteline in Murthal and Big Basket’s
lease of about 47,000 sq. ft. in Greater Noida.
In terms of supply, the region witnessed a drop
in project completions as only 1.3 million sq. ft.
was added during H2 2016. Bulk of the supply
was concentrated in Luhari, Binola on NH-8 and
Dadri, Hassangarh on NH-1.
Rental values continued to remain stable, and
were estimated to be in the range of INR 35 - 50 /
sq. ft. / month across Delhi, INR 15 – 22 / sq. ft. /
month across Gurgaon / NH – 8 and INR 10 -13 /
sq. ft. / month across Kundli / Murthal NH - 1.
Figure 4: Rental Value Movement

Leasing activity was driven by companies from 45

the retail sector that leased 25% of the total 40
space transacted during the review period. 35
Companies from the electronics and record 30
(INR / sq. ft. / month)

management sector, each with a 19% share were

25
the other prominent sectors that dominated
20
demand. On the other hand, leasing activity by
15
3PL players declined, when compared to H1
2016. Only 115,000 sq. ft. was leased as compared 10

to 240,000 sq. ft. during the previous review 5

period. This was largely observed due to most 0
3PL players deferring their investment decisions H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
and adopting a wait-and-watch strategy, until the Delhi Gurgaon/(NH-8)
GST is implemented. Demand from e-Commerce Kundli/Murthal/Akbarpur (NH-1) Ghaziabad (NH-24, 58,91)
players was also muted as their share in the
Source: CBRE Research, H2 2016.
overall space take-up declined from 31% in H1
2016 to only 6% during H2 2016. Limited Table 2: Selected Leading Transactions
availability of space across key micro-markets
Size (sq.
also contributed to the sluggish transaction Property Location Tenant
ft.)
levels. PEB
Gurgaon 75,000 Daikin
Structure
Notable lease instances include the 155,000 sq. PEB Mahindra
Murthal 60,000
ft. leased by the US based data management firm Structure Whiteline
PEB Mahindra
Iron Mountain, approximately 80,000 sq. ft. Gurgaon 50,000
Structure Logistics
leased by Philips and 75,000 sq. ft. leased by PEB
Bamnoli 15,000 Panalpina
Japan-based electronics retailer Daikin across Structure
modern PEB structures along NH-8 in Gurgaon. Source: CBRE Research, H2 2016.

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 M A R K E T V I E W NATIONAL CAPITAL REGION (NCR)

Table 3: Sub-market Key Stats

Rental Values in H2 Rental Values in H1
Half Yearly Y-O-Y
Micro-Market 2016 (INR / sq. ft. / 2016 (INR / sq. ft. /
Change (%) Change (%)
month) month)
Delhi 35-50 30-50 0.0 6.3
Gurgaon/(NH-8) 15-22 15-22 0.0 0.0

Kundli/Murthal/Akbarpur (NH-1) 10-13 10-13 0.0 0.0

Ghaziabad (NH-24, 58,91) 15-19 15-19 0.0 0.0

Source: CBRE Research, H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 6

 M A R K E T V I E W MUMBAI

M A R K E T S U M MA RY
Leasing activity witnessed a decline in Mumbai
during H2 2016; close to 458,000 sq. ft. was
leased during H2 2016 as compared to 973,000
sq. ft. during H1 2016. Bhiwandi continued to
remain the hub for warehousing demand in the
city. 3PL players (45%), FMCG companies (18%),
engineering and manufacturing firms (14%) and
pharmaceutical companies (10%) were the
leading occupiers of space during the current
review period. Leasing activity was concentrated
across projects such as Aastha Industrial
Complex, Babosa Corporation in Bhiwandi and
Prathamesh Complex, Ashra Logistics in Panvel.
Demand witnessed a healthy mix of space take-
up from domestic and foreign companies. In
However, there is a limited availability of large
sized ready-to-move spaces above 1,00,000 sq. ft.
This has led to an increase in demand for built-
to-suit warehouses.
As clients are likely to consolidate their portfolio
post the implementation of the GST, demand for
such large sized warehouses will continue to
increase. This may lead to a healthy escalation in
rental values in the medium-to-long term.
Figure 5: Rental Value Movement
25
20

(INR / sq. ft. / month)

Panvel, the demand for warehousing space
continued to remain subdued; however, during 15
the current review period few large-sized space
take-ups from 3PL companies were concluded. 10

Amongst the notable transactions, Aramex 5

(100,000 sq. ft.) and CMS (100,000 sq. ft.) leased
space at Ashra Logistics in Panvel, while FMCG 0
H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
company Cadbury (40,000 sq. ft.), Castrol (45,000
sq. ft.) and Wockhardt (45,000 sq. ft.) leased Bhiwandi (NH - 3) Panvel (NH - 4 & NH - 17)
space at Aastha Industrial Complex, Bhiwandi.
Source: CBRE Research, H2 2016.

With respect to supply, no new project

completions were witnessed in Mumbai during Table 4: Selected Leading Transactions
H2 2016.
Size
Property Location Tenant
(sq. ft.)
Rental values continued to remain stable across
markets. Since most of the existing Ashra Logistics Panvel 100,000 Aramex
developments in Bhiwandi have potential for Aastha Industrial
Bhiwandi 45,000 Castrol
future supply addition, developers have deferred Complex
a revision in the quoted rental values. Aastha Industrial
Bhiwandi 40,000 Cadbury
Complex

Prathamesh Complex Bhiwandi 40,000 Kurlon Mattress

Source: CBRE Research, H2 2016.

Table 5: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y

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

Bhiwandi (NH-3) 11- 15 11 – 15 0.0 8.0

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

Source: CBRE Research, H2 2016.

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 M A R K E T V I E W BANGALORE

M A R K E T S U M MA RY The Eastern Corridor witnessed e-Commerce

Bangalore witnessed healthy leasing activity
during H2 2016; 65% higher as compared to the
first half of the year, with major concentration
towards the Western, Southern and Eastern
corridors. No transactions were recorded in the
Northern corridor owing to lack of demand and
scarcity of modern warehousing facilities in the
region. The transactions were largely concluded
by engineering and manufacturing, FMCG, e-
Commerce and 3PL firms, focused on expanding
Figure 6: Rental Value Movement
their existing portfolios across the city.
player Flipkart lease around 70,000 sq. ft. and
3PL firm - GATI Logistics leasing around 20,000
sq. ft. of space, during H2 2016.
Rentals in Western and Southern markets
remained largely stable, however the East
Corridor witnessed marginal rental appreciation
in the range of 2-3% compared to H1 2016.
Northern Corridor, on the other hand, due to
scarcity of options witnessed rental appreciation
in the range of 22-23% on a half yearly basis.
25

At a micro-market level, the Western Corridor

witnessed the highest leasing activity, with 20
approximately 43% of the total transacted space,

(INR / sq. ft. / month)

followed closely by the Southern Corridor at 42% 15
and the Eastern Corridor at 15%, respectively.
During the second half of the year, engineering 10
and manufacturing sector led the absorption
(nearly 42%), followed by FMCG at 38% and e-
5
Commerce at 11% approximately, to the total
warehousing space transacted in H2 2016. This
0
trend is likely to continue in the near future as a H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
combination of multi-national and local
 North Corridor East Corridor West Corridor South Corridor
occupiers would continue to witness expansion
Source: CBRE Research, H2 2016.
across growth corridors, amidst growing
warehousing demand and improved Table 6: Selected Leading Transactions
infrastructure in the city.
Size (sq.
Property Location Tenant
ft.)
List of closed transactions in H2 2016 included Independent
Kunigal Road 84,000 Whirlpool
Hitachi leasing nearly 50,000 sq. ft., and Cargo building
Tec India leasing approximately 35,000 sq. ft. in Independent Reckitt
Bommasandra 70,000
the Western Corridor. Demand in the Southern building Benkiser
Independent
Corridor was contributed by firms such as Soukya Road 70,000 Flipkart
building
Reckitt Benckiser leasing close to 70,000 sq. ft. Independent
Dabaspet 50,000 Hitachi
and TTK Prestige leasing approximately 50,000 building
sq. ft. of space. Source: CBRE Research, H2 2016.

Table 7: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y
Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)
North Corridor 16-28 16-20 22.2 22.2
East Corridor 17-22 17-21 2.6 5.4
West Corridor 12-18 12-18 0.0 0.0
South Corridor 16-22 16-22 0.0 0.0
Source: CBRE Research, H2 2016

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 M A R K E T V I E W CHENNAI

M A R K E T S U M MA RY Rental values witnessed a marginal decline

The second half of 2016 witnessed closure of
several transactions in the warehousing segment.
Approximately 1.0 million sq. ft. of warehousing
space was leased during the second half of the
year. Leasing activity was largely driven by auto
ancillaries, 3PL and electronics segments.
The Western Industrial Belt continued to
dominate the warehousing activity with 0.76
million sq. ft. of leasing getting concluded in the
region during the review period. Leading
occupiers leasing space during the review period
included auto ancillaries, 3PL, electronics and
engineering & manufacturing companies.
Leasing activity was largely concentrated in
Indospace logistics and other standalone
developments. North Chennai micro-market
witnessed stable demand for warehouse space,
predominantly driven by the 3PL segment.
Southern Industrial belt along with the GST road
during the review period largely in anticipation
of an influx of new supply by prominent
developers.
Announcement of large scale logistics parks by
prominent developers such as Embassy group,
Casa Grande, Motherson, etc. is expected to
further exert downward pressure on rental values
in the Western Corridor. Similarly, rental values
in South Chennai micro market witnessed a
marginal decline of about 1 – 2 %. however,
North Chennai which was witnessing a decline in
rental values for the last two years maintained
stability in rentals during the review period.
Figure 7: Rental Value Movement
35
30
25
(INR / sq. ft. / month)

witnessed subdued demand for warehouse space 20

during the review period. However, the presence
15
of original equipment manufacturers (OEM’s)
and auto ancillary companies along with an 10
improved infrastructure are expected to be major
5
drivers for increased demand for warehousing
space in the coming quarters. 0
H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
Amongst the notable transactions closed during Western Belt Northern Belt Southern Belt
the review period, DHL leased 1,20,000 sq. ft. in
Source: CBRE Research, H2 2016.
Sriperumbudur, West Chennai, BMW (1,20,000
sq. ft.), Hutchinon (40,000 sq. ft.) and NSK Table 8: Selected Leading Transactions
Springs (47,000 sq. ft.) in Oragadam micro
market in West Chennai. Tata chemicals leased Size (in
Property Location Tenant
about 45,000 sq. ft. In north Chennai. In sq. ft.)
addition, South Chennai witnessed space take-up Independent
Sriperambudur 120,000 DHL
by Arvous in Mahindra world city in South Warehouse
Chennai. Indospace Oragadam 40,000 Hutchinon

Independent
No new project completions were witnessed in Oragadam 80,000 Uno Minda
Warehouse
Chennai during the review period.
Source: CBRE Research, H2 2016.

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 M A R K E T V I E W CHENNAI

Table 9: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y

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

Western belt -- Sriperambadur,

20 – 28 22 – 28 -4.0 -4.0
Oragadam, and Irrungatukottai

North Chennai (Manali, Red-

12 – 17 12 - 17 0.0 -3.3
hills, Periyapalayam,Karanodai)

South - GST Rd. and OMR Rd. 25 - 33 27 - 32 -1.7 -1.7

Source: CBRE Research, H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 10

 M A R K E T V I E W HYDERABAD

M A R K E T S U M MA RY During the review period, Hyderabad witnessed

The Hyderabad logistics market witnessed
subdued leasing activity as compared to the first
half of 2016. Majority of the lease transactions
concluded during the review period were
confined to small to medium space take up by
engineering and manufacturing, FMCG, telecom
and 3PL players.
The Northern Corridor of Hyderabad witnessed
stable demand for warehousing space driven by
3PL, telecom, FMCG and industrial players. The
region contributed to about 70% of leasing
activity witnessed in the city during the review
period. Prominent lease transactions concluded
in Northern Corridor during the review period
included Birla Tyre leasing 50,000 sq. ft. and
Himalaya Herbal healthcare leasing 36,000 sq. ft.
etc. Majority of these leasing transactions were
(INR / sq. ft. / month)
supply addition of about 0.35 million sq. ft. by
Indian Logistics in Medchal (Northern Corridor).
Availability of quality warehousing options and
increase in demand from 3PL, industrial and
FMCG players led to marginal rental appreciation
of about 1 - 3% on a half-yearly basis in the
Northern Corridor. Presence of Rajiv Gandhi
International Airport and NH 44 have provided
an excellent connectivity to the Southern
Corridor leading to an increase in enquiry levels,
which in turn led to a rental growth of 5-7% on a
half-yearly basis.
Figure 8: Rental Value Movement
18
16
14

12
concentrated in independent warehousing
10
developments. The Western Corridor
8
encompassing micro-markets of Patancheru and
6
Pashamylaram witnessed subdued demand for
4
warehouse space with no lease transactions
2
being concluded due to limited availability of
0
space in the micro-market. The Eastern Corridor H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
comprising of micro-markets of Uppal,
Northern Corridor Western Corridor Eastern Corridor Southern Corridor
Nacharam, Cherlapally and Autonagar witnessed
steady demand for warehouse space. The Source: CBRE Research, H2 2016.
Southern Corridor of Hyderabad comprising Table 10: Selected Leading Transactions
areas of Shamshabad, Bangalore Highway (NH Property Location Size (sq. ft.) Tenant
44) and Srisailam Highway observed sluggish
activity during the second half of the year. Tata Independent Northern
50,000 Birla Tyres
Tea which leased about 36,000 sq. ft. in an Warehouse Corridor

independent warehouse located in Shamshabad Himalaya

Independent Northern
was amongst the very few transaction closures in 36,000 Herbal
Warehouse Corridor
the micro-market . Healthcare

Independent Southern
36,500 TATA Tea
Warehouse Corridor

Source: CBRE Research, H2 2016.

Table 11: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y

Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)
North Corridor 9.5 – 14.0 9.0 – 14.0 2.2 6.8
Western Corridor 8.0 – 9.0 8.0 – 9.0 0.0 0.0
Eastern Corridor 16.0 – 18.0 16.0 – 18.0 0.0 0.0
Southern Corridor 10.25 – 12.5 9.0 – 12.5 5.8 5.8
Source: CBRE Research, H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 11

 M A R K E T V I E W PUNE

M A R K E T S U M MA RY
However, the industrial hubs of Sanaswadi and
Pune witnessed a strong increase in leasing Ranjangaon recoded a rental growth of 9 – 10%
activity as close to 630,000 sq. ft. was leased compared to H1 2016.
compared to only 275,000 sq. ft. during H1 2016. Figure 9: Rental Value Movement
The micro-markets of Chakan and Talegaon 28
(Northern Region) witnessed strong demand
26
largely led by manufacturing and engineering
24
firms and FMCG companies. Efficient
infrastructure, presence of a large number of 22
Original Equipment Manufacturers (OEM’s) in 20

(NR / sq. ft. / month)

the region and its close proximity to Maharashtra 18
Industrial Development Corporation (MIDC) area
16
continued to drive demand for warehousing
space in this region. On the other hand, Eastern 14

Pune (Sanaswadi and Ranjangaon) and Pimpri / 12

Chinchwad witnessed limited occupier interest 10
resulting in only few small-sized transactions. H2 2014 H1 2015 H2 2015 H1 2016 H2 2016

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

Among notable transactions, Swedish Furniture Pimpri-Chinchwad
retailer, IKEA leased 300,000 sq. ft., while
Mahindra Logistics leased close to 100,000 sq. ft. Source: CBRE Research, H2 2016.
at Chakan. Around 45,000 sq. ft. of space take-up
by French engineering company Faurecia was Table 12: Selected Leading Transactions
another notable deal that was concluded during Property Location Size (sq. ft.) Tenant
the current review period.
Independent
Chakan 300,000 IKEA
Development
No new project completions were witnessed in
Pune during H2 2016. Independent
Ranjangaon 40,000 Faurecia
Development

Rental values remained stable during the review Independent

Chakan 40,000 Thermo Fisher
period and were estimated in the range of INR 24 Development
– 26 /sq. ft. /month at Chakan, Talegaon. Source: CBRE Research, H2 2016.

Table 13: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 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 20-23 9.0 9.0
Ranjangaon)

Pimpri-Chinchwad 20-24 20-24 0.0 0.0

Source: CBRE Research, H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 12

 M A R K E T V I E W KOLKATA

M A R K E T S U M MA RY
Figure 10: Rental Value Movement
25
Leasing activity picked up significantly in
Kolkata during H2 2016, as close to 1.4 million
sq. ft. was leased, as compared to close to 20
340,000 sq. ft. during H1 2016. The micro market
of Dhulagarh, Sankrail and Uluberia along NH-6
15
witnessed close to 70% of the overall transaction

(INR / sq. ft. / month)

activity in the city. Occupiers from the FMCG,
FMCD, engineering and manufacturing sectors 10
were the major occupiers of space.
5
Few notable transactions during the review
period included Autohaus leasing approximately
172,000 sq. ft. and Pittie Group leasing around 0
H2 2014 H1 2015 H2 2015 H1 2016 H2 2016
120,000 sq. ft. along NH-6. The approximately
NH - 2 (Dankuni, Old Delhi Road)) NH - 6 (Dhulagarh,Sankrial,Uluberia)
90,000 sq. ft. lease by Great Eastern appliances at
Taratala - – Budge Budge Trunk Road
NH 6,Sankrail Industrial Park, Safexpress leasing
about 80,000 sq. ft. at NH-2, and the Source: CBRE Research, H2 2016.
approximately 72,000 sq. ft. leased by Blue Star at
Table 14: Selected Leading Transactions
NH-6 were among the other notable transactions
that were concluded during the period. Size (in
Property Location Tenant
sq. ft.)

During H2 2016, Kolkata witnessed new supply Neo Seamless

Domjur Road 172,000 Auto Hous
addition of about 360,000 sq. ft. of space spread Pvt Ltd
Mittal
across the micro-markets of NH6, NH2 and NH - 2 80,000 Safexpress
Warehousing
Taratala.
Sankrail Great Eastern
NH - 6 90,000
Industrial Park Appliance
Rental values remained largely stable across
micro-markets during the review period. B.D Casting NH - 2 70,000 Asian Paints

Source: CBRE Research, H2 2016.

Table 15: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y
Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

NH - 2 (Dankuni, Old Delhi

16-24 16-24 0.0 0.0
Road)
NH - 6 (Dhulagarh, Sankrial,
15-17 15-17 0.0 10.3
Uluberia)
Taratala - – Budge Budge
17-24 17-24 0.0 0.0
Trunk Road
Source: CBRE Research, H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 13

 M A R K E T V I E W AHMEDABAD

M A R K E T S U M MA RY

Leasing sentiments remained sluggish across Figure 11: Rental Value Movement
Ahmedabad during the current review period.
35
Very few transaction closures were recorded
across the city. Aslali, which falls outside the 30
city’s octroi limit and is in proximity (about 15
km) to the Central Business District (CBD) on the 25

Mumbai–Delhi National Highway, continued to 20

I(NR / sq. ft./ month)

remain the preferred market for leasing space.
Due to the supply crunch at Aslali, occupier 15

enquiry continues to remain focused on modern 10

developments in Aslali Extension.
5

No new project completions were witnessed in

0
Ahmedabad during the review period. H2 2014 H1 2015 H2 2015 H1 2016 H2 2016

Changodar Sanand Odhav Aslali Aslali Extension (Kheda)

Rental values remained largely stable across
Source: CBRE Research, H2 2016.
micro-markets, with the exception of Aslali and
Aslali Extension where values increased by 6 – 8%
when compared to H1 2016 owing to strong
occupier interest.

Table 16: Sub-market Key Stats

Rental Values in H2 2016 Rental Values in H1 2016 Half Yearly Y-O-Y
Micro-Market
(INR / sq. ft. / month) (INR / sq. ft. / month) Change (%) Change (%)

Changodar 17-20 17-20 0.0 -2.6

Narol 21-25 21-25 0.0 0.0
Sanand 16-18 16-18 0.0 0.0
Odhav 15-20 15-20 0.0 0.0

Aslali 16-20 15-20 5.9 12.5

Aslali Extension (Bareja) 11.5-14.5 10-13 8.3 0.0

Source: CBRE Research, H2 2016.

H1 2016 CBRE Research © 2017, CBRE, Inc | 14

 M A R K E T V I E W OTHER MARKETS

State Market Highlights Demand Rents

 Transaction activity continued to remain broadly in line with H1 2016,

largely concerted in Mohali and Ludhiana.
Punjab

 Rental values remained largely stable across investment grade stock.

 Jaipur continued to be high on radar for logistics occupiers.

Rajasthan
 Prime logistics centers such as Vishwakarma Industrial Area, Sitapura
Industrial Area and Sikar Road witnessed sustained occupier focus.

 Patna continued to be the most preferred market for warehousing.

Bihar
 Supply of modern warehousing was concentrated towards the Patna -
Gaya Road.

 Guwahati, the state capital of Assam, continued to remain the preferred

warehousing market.

Assam  Locations such as Beltola, Lokhra- Pamohi, Gouripur and Changsari

offered strategic advantages in terms of low occupation and
transportation costs and excellent connectivity.

 Bhubaneswar and Cuttack continued to be considered as important

warehousing markets due to locational advantages and connectivity.
Odisha
 Bhubaneswar - Cuttack Road (NH - 5) especially Mancheswar
Industrial Estate, Pahala and Phulnakhra were the most preferred
warehousing zones.

 Lucknow the capital city of the state of UP continued to be the most

preferred market for logistics space.
Uttar Pradesh
 Location such as Nadarganj and Bijnor were the most preferred
warehousing zone for large players as they offer great connectivity to
the Airport and also to Kanpur (another key market in the state).

 Raipur, the state capital of Chhattisgarh is the preferred warehousing

markets due to its locational advantage and infrastructure.
Chhattisgarh
 Locations such as Ring road 2, Ring road 3, Tatibandh, Kumhari offer
strategic advantages in terms of low occupation and transportation costs
and excellent connectivity.

 Raipur, the state capital of Chhattisgarh is the preferred warehousing

markets due to its locational advantage and infrastructure.
Chhattisgarh
 Locations such as Ring road 2, Ring road 3, Tatibandh, Kumhari offer
strategic advantages in terms of low occupation and transportation costs
and excellent connectivity.

Note: Demand and rental arrows represent change over H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 15

 M A R K E T V I E W OTHER MARKETS

State Market Highlights Demand Rents

 Nagpur is a prominent warehousing market due its strategic location.

Maharashtra  Amravati road and Mihan are basically considered to be the Logistics /
Industrial hub of Nagpur. With GST rolling out the market will see a
boost in demand for warehousing

 MIDC’s in Aurangabad are mostly converting to residential and

commercial hub
Maharashtra
 There are large number of properties in Aurangabad that are up for
Sale in the Market

 Industrial requirement for Nashik has dropped significantly

 Mumbai Nashik Highway has some warehousing and small scale

Maharashtra industrial activities

 Ambad and Satpur located to the west of Nashik have ample supply and
are seeing change of usage from industrial to commercial
 Bhilad / Vapi (Valsad District) bordering Mumbai, is ideally located to
serve both Gujarat & Mumbai markets. Post GST, this location will
increasingly finding favour with 3PLs players
Gujarat
 In the absence of any established warehousing hub, large build-to-suit
requirements / captive warehousing units could be the preferred mode
of acquisition

 Vizag is emerging as a prominent business city / hub in Andhra Pradesh

Andhra Pradesh  Port based logistics activity is primarily located around the existing
Visakhapatnam Port Area; and other logistics activity is primarily
located along NH-5, an arterial road bisecting Visakhapatnam City

Note: Demand and rental arrows represent change over H2 2016.

H2 2016 CBRE Research © 2017, CBRE, Inc | 16

 M A R K E T V I E W OUTLOOK
The GST will be the overarching theme for
warehousing activity in coming quarters. CBRE
India conducted a survey of leading occupiers of
warehousing space in the country to gauge their
views around the GST, its impact on their business
and operating costs and likely strategies post its
implementation. Approximately 63% of
respondents felt that the implementation of the
GST will be positive for their overall business
operations in India. Another interesting finding
from the survey was that in the post-GST era
most warehousing space requirements would be
driven by consolidation and expansion activity of
occupiers. Close to 28% of respondents said they
would consolidate, while 23% stated that they
would further expand their operations across the
country.
I N C R E AS E D P A R T I C I PA TI ON F R O M P R I V A TE
D E V E L OPE R S A N D I N S T I TUTI ONA L F U N D S
As the warehousing sector moves towards a more
systematic mode of operation, the sector is likely
to witness the inflow of more institutional
funding and formal sources of capital. As
national players with larger warehouses emerge;
deployment of capital in these fewer, better
quality assets is likely to become easier.
Numerous Prominent private equity firms and
regional developers have already conveyed their
intentions to develop large modern warehousing
across the country. The introduction of Real
Estate Investment Trusts (REITS) will offer an
exit route to such investors and developers,
thereby making warehousing a more lucrative
investment.
H2 2016 CBRE Research
D E M A N D F R O M E N G I N E E RI N G A N D
M A N U F AC TURI NG S E C TOR C O M PA NI ES T O
GROW
Given the significance of the sector in the overall
growth of the economy, it has received a great
impetus from the government, both in terms of
policy initiatives as well as rationalization of tax
reforms. Currently, the sector offers immense
opportunities for both domestic and foreign
players. We have already witnessed a great deal of
investments during 2016 and this trend is only
likely to gain momentum going forward. An
anticipated increase in demand from
manufacturing companies will spur supply of
quality warehousing, which is likely to lead to
emergence of new warehousing hubs as well as
expansion of the existing hubs.
THE GST TO DRIVE DEMAND FOR LARGE SIZED
W A R E H OU S E S
As the GST implementation moves towards a
reality, the Indian warehousing sector is poised
for structural changes in its operation dynamics.
The current system of interstate taxation results
in the domination of the warehousing sector by a
large number of unorganized players. Once the
GST comes into play, the focus of players is likely
to be on supply chain efficiencies which will
result in consolidation of warehouses. This will
result in increased demand for larger, better
quality warehouses thereby providing an ideal
platform for the emergence of large scale
nationwide players.
© 2017, CBRE, Inc | 17
 M A R K E T V I E W 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

Swapnil Pillai
Manager, India CBRE
+91 22 4069 0100
Swapnil.pillai@cbre.co.in

Jasmine Singh
Executive Director, National Head –
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

Disclaimer: CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have
not verified it and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented
exclusively for use by CBRE clients and professionals, and all rights to the material are reserved and cannot be reproduced without prior express written permission of CBRE.
CIN - U74140DL1999PTC100244