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 Demand from e-commerce firms, a tiny fraction of India's retail
industry, accounted for as much as 40 percent of 1.7 million square
feet of warehouses leased in 2014 - a seven-fold increase from 2013,
according to consultants CBRE South Asia. Warehouse rents have risen
by a quarter over the past year.
Other estimates indicate office rents in India's tech hub Bengaluru
could rise by as much as a fifth in the next six to nine months as
e-commerce companies add to demand.
The result, say developers and analysts, is a speedier than expected
recovery for India's commercial property sector, badly dented by two
successive years of sub-5 percent economic growth.
"The best has yet to come for the sector and that will have a
snowball effect on the property sector with increased appetite for
office space, logistics and warehouse," said Sigrid Zialcita,
managing director, research for Asia Pacific at consultant Cushman &
Wakefield.
In October, online retailer Flipkart, one of India's largest market
place sites, agreed to lease 3.25 million square feet of office
space in Bengaluru from developer Embassy Group, making it one of
the biggest commercial property leasing deals ever.
"There will be large requirements from these kinds of companies,"
said Jitendra Virwani, chairman and managing director of Embassy,
adding such deals were few, but growing.
While e-commerce companies comprised less than 5 percent of the 30
million square feet of offices leased in 2014, they are expected to
drive demand over the next three to six years.
Uptake of total warehouse space is likely to more than double to 4
million square feet in 2015, as more Indians shop online.
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Revenues of e-commerce companies in Asia's third-largest economy are
expected to rise to $1.5 to $2 trillion over the next 10 years, says
Cushman. India already has the world's third-largest population of
Internet users.
Among those looking for space is Amazon, which needs a million
square feet of offices in Bengaluru, according to property
consultants. Amazon had no immediate comment.
Indian classifieds portal Quikr said it is looking for 50,000 square
feet. Furniture retailer Pepperfry said it plans to grow its shed
space to 3 million square feet by 2017 from 250,000 square feet,
while rival FabFurnish said it would more than double its space to
800,000 square feet by mid-2016.
Cushman's Zialcita said that while technology and outsourcing
companies will make up the lion's share of demand for now,
e-commerce firms will contribute notably in future.
"This is still in its nascent stage... it has the potential to
grow," she said. ($1 = 61.7000 Indian rupees)
(Editing by Clara Ferreira Marques and Muralikumar Anantharaman)
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