Why Warehousing ?
- Today, Logistics is considered an international service with the potential to trade globally and earn foreign exchange for the country given the dynamic economic situation, globalization and rapid developments in the logistic sector, it has changed into the concept of an industry.
- Logistics today play a pivotal role in the economic development of the country.
- In India, radical reforms such as GST implementation will change the distribution models of large conglomerates requiring them to adopt geographic distribution strategies.
- In the World Bank’s biennial measure of international supply chain efficiency, called Logistics Performance Index, India’s ranked at 35 in 2016, indicating concerns in the area of country’s logistic infrastructure.
- The Sector today faces challenges such as availability of suitable land, lack of skilled workforce, inadequate infrastructure in terms of roads, rail, ports and airports and more.
- The sector is largely unorganised. A majority of investment in traditional warehouses with an average size of less than 10,000 Sq.ft. and height of 3 to 4 meters that are used for storage with single user facilities. These infrastructure lacks in quality standards and specifications.
Modern warehouses requirements are
- Approximates size around 50,000 Sq. Ft,
- Equipped with racking systems, Palletization and Standardization,
- Leak proof structures,
- 24 hour security,
- Multi user facility with modern infrastructure that are located near optimal locations
- Best usage of automation and IT leading to minimum pilferage and losses
All the above facilities are equipped in only a small number of premises.
Since Maharashtra is the most industrialized state in India, augmented with a huge consumer market, challenges faced by logistics sector need to be addressed at the earliest.
The Integrated Logistic policy (ILP) launched by Government of Maharashtra in 2018 aims to address the challenges faced by the logistic sector in the state.
Why Invest in Warehousing ?
- E-Commerce is envisaged as the future of Retail Business
- Rentals in Mumbai for Retail is Rs. 200-300 PSFT approx. while in Warehousing Rentals are hardly around Rs. 18/- PSFT (approx.)
- At 10% Rentals and usage of e-commerce technology, Warehousing seems to be perfect solution to save cost and expand simultaneously
- Bhiwandi is hardly 37 kms from Mumbai City and just about 12 kms from Thane hence could be an ideal alternative to expensive real estate in the city of Mumbai
- Thane’s Real Estate has seen a phenomenal growth hence the likelihood of Capital Appreciation is very high in Bhiwandi
- Government push to Industry Logistics Policy for Warehousing ensures legally approved and MNC compliant supply
- ILP inventory will always over score over stock of Green Zone (Gram Punchayat approved) as the former is legally and MNC compliant
Why Warehousing at Bhiwandi ?
- Rental Yield for Ground Floor in Mumbai market is 6%, for Office Space Yield is 8% while on an average yields at Bhiwandi Warehousing is about 9% onwards
- Highest Capital Yield amongst all Pre lease asset classes, is one of the major attraction for investing in warehouse
- Ownership of Land; While buying a Pre leased Commercial Unit one gets only the ownership of unit in absolute terms, while the land ownership is shared with all unit owners of the project however in case of Warehousing one can own not only the unit but also the land
- Prices and Rentals at Bhiwandi are at very low levels compared to Thane wherein hardly 12 kms away, Rentals are 3 times and Land is priced 10 times
- Rent at about 20 Rs per sqft and Land at about 2,500 Rs per sqft hence both offer ample
- scope of appreciation
In all it can be said that Triple Benefit of High Capital Yield, High Capital Appreciation & Security of Land makes Warehousing a perfect Pre leased Investment option