Mumbai ranks highest; Nagpur, Gurgaon, Vizag the new emerging logistics destinations
27 Aug, 2008, India
According to a recently released report by Cushman & Wakefield - Logistics Industry – Real Estate’s New Powerhouse – the Indian logistics industry is expected to grow annually at a rate of 15 to 20 per cent, reaching revenues of approximately US$ 385 billion by 2012. Cushman & Wakefield estimates that the market share of organised logistics players is also expected to double to approximately 12 per cent during the same period.
The report reveals that by 2012 there will be 110 logistics parks operational, spread over approximately 3,500 acres at an estimated cost of US$ 1 billion. While, are expected to be operational and estimated another 45 million sq. ft. of warehousing space with an investment of US$ 500 million is expected to be developed by various logistics companies by 2012the same timeframe. With most of these developments concentrated in 14 locations, Cushman & Wakefield identified the front runners based on various parameters such as the existing logistical infrastructure, existing and proposed manufacturing clusters, consumer markets, state and union government initiatives and geographical location. These centres have a direct bearing on the real estate developments in and around such locations.
Sanjay Dutt, Joint Managing Director for Cushman & Wakefield in India adds, “Since almost one-third of the total realty development in the sector is expected to take place in emerging locations, many tier-2 and tier-3 cities and peripheral locations that offer good connectivity to multiple markets will witness increased activity from logistics players, providing a thrust to the real estate market.”
Emerging hubs include locations such as Nagpur, Vizag and Gurgaon have been rated which currently lagging behind in support infrastructure but are promising logistical hubs due to high ratings on other parameters such as geographic location, existing and proposed manufacturing clusters and SEZs and accessibility. There are many infrastructural developments taking place in these locations which would be increase the attractiveness of these locations in the next 3-5 years.
Heightened manufacturing activities, and proposed SEZs increase the potential of locations like Bangalore, Indore, Alwar, Jamshedpur , Ahmedabad and Ambala of being developed as logistics hub. However, currently these locations do not rate high on parameters like geographic location, investment in infrastructure, have moderate retail penetration and limited presence of multi layered manufacturing industries. These locations however are touted to be emerging as major manufacturing hubs in the near future, which be critical in promoting the logistics industry in these regions.
Kochi makes it to the last category of ‘Nascent Hub’ largely due to its strategic location which allows it to connect effectively throughout southern India and through maritime routes and internationally due to the presence of the international airport. Yet challenges including infrastructure development, presence of manufacturing and government initiative rate this location lower than other destinations.
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