Published On:May 22 2019
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Bengal emerging as warehousing hub.

West Bengal, and particularly Kolkata and its suburbs, is fast emerging as a major warehousing and logistics hub.

It is learnt that deals worth Rs. 500-700 crore have either been inked or are being finalised for warehouses along National Highway 2 (Delhi Road) and National Highway 6 (Bombay Road).

Land acquisition

Negotiation for the acquisition of at least 500 acres of land in various villages is under way.

Logistics-focussed global PE funds and developers such as Morgan Stanley, ESR (backed by Warburg Pincus), Allcargo Logistics, Indospace, Embassy and others are putting in big money.

The Delhi Road, Old Delhi Road and Bombay Road areas are around 30-40 km from the city and are well connected to North Indian, Eastern and North-Eastern States.

What has induced developers and PE funds to look at the eastern region are the advent of GST, better connectivity, higher penetration of e-commerce and a sound ‘hub and spoke’ model.

Kolkata and its suburbs took up warehousing space to the tune of 3.5 million sq ft last year.

Locational advantage

According to Swapan Dutta, Branch Director Corporate – Senior Management, at real estate consultancy firm Knight Frank (India) Pvt Ltd, there is a distinct move from smaller warehouses in the northern and southwestern fringes of the city.

The preferred areas include those along the highways.

Nearly, 80-90 per cent of the upcoming Grade A and B warehousing stock are along the NH 6 and NH 2 and adjoining areas.

Given the paucity of land along the Bombay Road (NH 6), the development activity is shifting to the Delhi Road (NH 2) and the ‘Old Delhi Road’ area.

A number of closed industrial units and available land plots make expansion in the ‘Old Delhi Road’ area more feasible.

“At least Rs. 500-700 crore worth of warehousing and logistics projects are coming up along NH 2, NH 6 and Old Delhi Road areas. They will be ready in perhaps 12-15 months,” Dutta told BusinessLine .

Investment potential

Land prices have shot up by 30 per cent as a consequence — from Rs. 70 lakh an acre toaround Rs. 1 crore . An additional Rs. 1,500 per sq ft is being spent on construction.

Real estate consultants JLL had said in a 2018 report that between 2018 and 2020, there would be Rs. 4,300-crore investments in warehousing and logistics in the State.

The major investors include FMCG players and e-commerce companies such as Flipkart and Amazon. Some 3PL companies such as Mahindra Logistics are also taking up space in upcoming logistics parks.

HBL





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