HYDERABAD: Logistics and warehousing, which constitute a critical link in the supply chain that connects the manufacturer to the eventual consumer, has faced the effect of Covid-19 in the State capital with warehousing market transactions coming down in financial year (FY) 2021. The total annual absorption shrank by 30 per cent year-on-year (YoY) from 0.3 mn sq m (3.4 mn sq ft) in FY 2020 to 0.2 mn sq m (2.4 mn sq ft) in FY 2021.
According to Knight Frank’s Warehousing Market Report 2021, Hyderabad’s industrial and warehousing market transaction activity slowed down in FY 2021 in comparison to its performance last year. Warehousing demand is dominated by e-commerce, retail and the fast-moving consumer goods (FMCG) industries.With most retail and e-commerce companies preferring to outsource their logistics and warehousing operations to third-party logistics (3PL) providers in recent years, warehousing demand of 3PLs has grown in Hyderabad.
Speaking to Express, Samson Arthur, Director, Knight Frank (Hyderabad), said that the e-commerce sector has been driving demand for logistics and warehousing in Hyderabad.“The e-commerce sector demand 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,” he informed.
Shamshabad is an exception
In Hyderabad, warehousing activity 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 total transactions in FY 2021, Shamshabad cluster has seen a significant spike in activity compared to its 5 per cent share last year. Two transactions by Amazon totalling 0.1 mn sq m (1.1 mn sq ft) i.e. 46 per cent of the total FY 2021 transaction activity is the reason for this huge jump in this cluster’s demand share,” the report said.
The Medchal cluster has accounted for 48 per cent of the FY 2021 warehousing demand, a fall from its share of 87 per cent last year. 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 in the city of Hyderabad, the report added.