Hyderabad sees drop in industrial and warehousing transactions- The New Indian Express

Hyderabad sees drop in industrial and warehousing transactions- The New Indian Express

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Express News Service

HYDERABAD: Industrial and warehousing market transaction activities slowed down across Hyderabad in financial year (FY) 2021, in comparison to last year.

According to a report by Knight Frank, the total annual absorption shrank by 30 per cent YoY, from 3.4 mn sq ft in FY 2020 to 2.4 mn sq ft in FY 2021. Pandemic exigencies and the resulting economic challenges caused this slump in warehousing absorption during the last year.

The major drivers of the warehousing sector in Hyderabad are end-user consumption-based categories, as industrial presence in the city is limited. Warehousing demand is dominated by e-commerce, retail and fast-moving consumer goods (FMCG). With most retail and e-commerce companies preferring to outsource their logistics and warehousing operations to third-party logistics (3PL) players in recent years, the warehousing demand of 3PLs has grown in Hyderabad.

As per the report, in FY 2021, the spurt in e-commerce growth resulting from the Covid-induced rise in online shopping caused a spike in the warehousing demand share of e-commerce and FMCG sectors. The demand for e-commerce sector jumped from 28 per cent in FY 2020 to 54 per cent in FY 2021, while the FMCG warehousing demand grew from 11 per cent in FY 2020 to 20 per cent in FY 2021.

Warehousing activity in Hyderabad is largely concentrated in three major clusters. These are the Medchal cluster in the north located along the Hyderabad- Nagpur highway, the Patancheru cluster in the west on the Mumbai-Hyderabad highway and the Shamshabad cluster in the south located along the Bengaluru-Hyderabad highway.

With a 51 per cent share in the FY 2021 total transactions pie, the Shamshabad cluster has seen a significant spike in activity compared to its five per cent share last year. Two transactions by Amazon totalling 1.1 mn sq ft, i.e. 46 per cent of the total FY 2021 transaction activity, are the reason for this huge jump in this cluster’s demand share.

The more popular Medchal cluster accounted for 48 per cent of the FY 2021 warehousing demand, a fall from its share of 87 per cent last year. The fall is a result of the skew caused by the two Amazon transactions in the Shamshabad cluster. During FY 2021, land rates grew marginally in the Patancheru and Shamshabad clusters, while rentals remained largely steady across locations in the three warehousing clusters.

Rise in shopping aids warehousing

As per the report, in FY 2021, the spurt in e-commerce growth resulting from the Covidinduced rise in online shopping caused a spike in the warehousing demand share of e-commerce and FMCG sectors. The demand for e-commerce sector jumped from 28 per cent in FY 2020 to 54 per cent in FY 2021

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