India’s industrial and warehousing demand across the top five cities remained strong during the first quarter (Q1) of 2023, rising by 11 per cent Year-over-Year (YoY) at 7.2 million sq ft, according to Colliers survey. The quarter also saw the highest leasing compared to the previous 8 quarters.

This sustained streak in leasing was backed by 3PL operators who continued to expand across large markets, forming 41 per cent of total leasing during the quarter. This was distantly followed by the FMCG sector at 12 per cent. Interestingly, demand from Retail and FMCG sectors saw a three-fold rise YoY, as they expanded their footprints in larger markets such as Delhi-NCR and Mumbai. This pick-up in the take up of industrial warehousing space pairs well with the growth in private consumption in the domestic economy.

“Third-Party Logistics (3PL) operators are targeting larger dense markets with good-quality infrastructure for expansion to ensure quick delivery of online orders. It contributed to more than 2/3rd of the total leasing in Mumbai, led by select large deals. Average deal size by 3PL operators in the city was more than 2 lakh sq feet, 69 per cent higher than pan India average. 3PL operators will continue to eye larger markets as they look to augment their distribution network,” according to Vimal Nadar, Senior Director, and Head of Research, Colliers India.

While industrial and warehousing demand remained sturdy during Q1 of 2023, new supply across top 5 cities was limited. Supply across top 5 cities declined 8 per cent YoY, at 5.8 million sq ft, as developers remained watchful on the evolving demand scenario.

Higher raw material prices and increased logistics costs also impacted new project completions across major markets. Over the next few quarters, developers will continue to remain cautious and are likely to bring in supply to meet market demand, keeping market fundamentals intact.

Owing to limited available supply and robust demand, vacancy levels across top five cities dropped by 170 basis points YoY during Q1 of 2023 to 8.1 per cent. Majority of the markets except Delhi-NCR saw single digit vacancy levels, backed by steady demand from 3PL, FMCG & engineering companies. With demand being upbeat amidst limited supply, rentals across top micro-markets saw an annual rise. Chakan in Pune, and Bhiwandi in Mumbai were some of the key micro markets which saw an uptick in rentals by 14 per cent and 6 per cent respectively.

According to Savills, the industrial and logistics sector is likely to see absorption of 40+ million sq. ft. during this year. This demand for space could stem from emerging tier II and III cities, growing demand for urban warehousing and a major transformation in the Indian manufacturing sector backed by Performance Linked Incentives (PLIs) and efficient multi-modal connectivity plans for local and global distribution.

The market is witnessing new projects delivered with improved specifications and high quality environmental, health and safety (EHS) standards. As a result, there has been a consistent increase in the percentage of grade A supply across cities in recent years. In Q1 of 2023, grade A space accounted for 52 per cent each of total absorption and supply witnessed in the market, indicating significant demand for quality space.

In a related development, Morgan Stanley report says the property up-cycle is now well entrenched, as India is amidst the upward trajectory of the eighth real estate cycle in a span of seven years. Balance sheet positions appear strong with the recent repair and consolidation. Real estate sales and launches are currently at multi-year highs.

What is the procedure to repatriate sale proceeds of inherited property. Does RBI permission required for repatriation? Please clarify. Sharat Babu, Sharjah

General permission is available to NRIs and PIOs to repatriate the sale proceeds of property inherited from a person resident in India. If those conditions are fulfilled, then NRI need not seek permission from the RBI. However, if the property has been inherited by an NRI from a person resident outside India, then the NRI must seek specific permission from the RBI.

There are certain conditions prescribed for repatriation in case of property inherited from person resident in India. The amount of repatriation should not exceed $1 million per financial year. Second, you must produce documentary evidence in support of the inheritance and an undertaking and certificate by a chartered accountant in the formats prescribed by the Central Board of Direct Taxes.

I bought a plot from a developer in Coimbatore. It has been approved by Panchayat authorities. Will it be sufficient. Please clarify. M Gautham, Dubai.

While investing in plotted development projects, it is necessary to follow certain ground realities. Generally the Directorate of Town and Country Planning (DTCP) is the approval authority. In panchayat approved plots, certain developers may not leave provision for laying internal roads which will all affect approval process while building homes in future.

V Nagarajan