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The warehousing segment has been an attractive investment opportunity due to absence of any organized player in the market and also because mismatch in the demand & supply. It has seen consistently good demand & rentals have been holding well even in the difficult market conditions, indicating the robustness in this sector.
The Milestone warehousing funds have already invested in two cities and are planning to expand our warehouses to eight more cities or logistics hubs like Hyderabad, Bengaluru, Chennai and Kolkata. Over the next five years, there is a need or demand for some 300 million sq ft for warehouses that would require a capital expenditure of over Rs. 40,000 crores. Currently, this segment has been growing at 10%-12% but over the next ten years, we expect it to grow at a rate of 30%-35% per annum and would be worth $25 billion
The reason for Milestone’s bullishness in this sector is that presently warehousing is dominated by unorganized players who do not have a pan-India presence or network, and the investment philosophy is that one who can set up modern & functional warehouses across the country will certainly get more benefits from it.
Currently, the warehouse rentals are between Rs. 14 to Rs. 20 per sq ft per month while the construction cost comes at Rs. 600 - Rs. 700 per sq ft. In short it can be said that the business offers an annual yield of about 25%. |
Bhiwandi
