Demand for quality warehouse is set to emerge as the new driver for the real estate industry in Bengal, giving the sector a much-needed momentum at a time it is grappling with appalling traction in the office space market.
The adjoining areas of Calcutta alone can absorb over 10 million square feet of space in the next three years if developers build top-grade warehouses, a real estate management firm predicted.
In contrast, the city may take a decade to fill up the same volume of office space unless demand picks up. Calcutta absorbs around a million square feet of office space annually.
“The implementation of the GST and growth of e-commerce have opened up a new vertical for us. We are very bullish in this sector,” Nandu Belani, president of Credai Bengal, the body of real estate developers, admitted. He is trying to develop a 30-acre plot near Bagnan, Howrah, on NH6, the hottest corridor for the Calcutta market.
JLL, which predicted an investment of Rs 4,300 crore in the warehouse market in a recent report, said the potential was higher.
“This number only translates to a demand we had forecast to serve the Calcutta market. If other important centres such as Siliguri, Durgapur and Haldia are considered, the requirement of top-grade logistics space will be much more,” Surekha Bihani, managing director of JLL, Calcutta, said.
JLL predicted 22 million square feet space of Grade A & B warehouse in and around Calcutta by 2020 compared with 11.6 million square feet available now. Much of the demand will be from companies looking to move out of old godowns to modern logistics centres.
The Mamata Banerjee-government has also recognised the potential of the sector and published a separate policy to support it in the latest edition of business summit concluded last week. The sector will be given infrastructure status, aiding developers to get cheaper loans from financial institutions as opposed to real estate.
“With its inherent strategic location, Bengal is best suited for the logistics hub for the entire eastern region, northeastern states and neighbouring countries. Hence, it is apt and logical to come out with a logistics policy which will leapfrog the intention to implementation,” Sanjay Budhia, managing director of Patton Industries, said.
Patton has joined hands with Embassy Industrial Park of Bangalore, which is supported by international private equity fund Warburg Pincus, to develop a 50-acre plot near Uluberia on NH6 for a 1.1 million square feet facility entailing Rs 400 crore investment. Embassy said at the summit that it was looking at more land to invest another Rs 600 crore in the state.
E-commerce players are expected to be major occupiers as they are looking to build regional distribution centres in quality warehouses which can be insured.
The distribution centres, which help them reach the market faster, typically come up on half a million square feet space.
