Skip to footer

India sees commercial property boom thanks to e-commerce

E-commerce sites such as Amazon and rivals have led to a commercial property boom in India as companies seek more storage space.

|
Mark Humphrey
File - Ashley Merritt packs an order for shipping at the Amazon fulfillment center in Lebanon.
  • By Aditi Shah Reuters

Internet retailer Amazon and its fast-growing local rivals are driving a boom in commercial property leasing in India as their storage needs rise, with shoppers in the country going online to buy everything from televisions to groceries.

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.

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)

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to India sees commercial property boom thanks to e-commerce
Read this article in
https://www.csmonitor.com/Technology/2015/0123/India-sees-commercial-property-boom-thanks-to-e-commerce
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe