Online Rivals driving Commercial Property Demand in India

Posted on 31 January, 2015 by Jodee Redmond

Amazon and its local rivals are responsible for propelling a boom in commercial property leasing in India. The company leases space as its storage needs increase, and shoppers are turning to the Internet to buy everything from big ticket items like televisions to their groceries.

young beautiful arabian woman using laptop computer

The demand from e-commerce firms, which account for a small fraction of India’s retail industry, accounted for up to 40 per cent of 1.7 million sq ft of warehouse space leased in 2014. The figure was seven times higher than the previous year, according to CBRE South Asia. Warehouse Rents have increased by 25 per cent over the past 12 months.

According to other estimates, office rents in the country’s tech hub Bengaluru could increase by up to 20 per cent over the next six-nine months, as e-commerce companies add to the demand for space. Amazon is reportedly looking for a million square feet of office space in the city. The company had no immediate comment on the matter.

In October, Flipkart, the online property retailer and one of India’s largest marketplace sites, signed a lease for 3.25 million sq ft of office space in Bengaluru from Embassy Group. It was one of the largest commercial property leasing deals ever signed in the country.

Pepperfry, a furniture retailer, has plans to increase its warehouse space from 250,000 sq ft to three million square feet by 2017.

FabFurnish, another furniture retail company, has said that it wants to more than double its space to 800,000 sq ft by the middle of 2016.

E-commerce companies made up less than five per cent of the 30 million sq ft of offices leased in 2014, but they are predicted to drive demand over the next three to six years. Uptake of total warehouse space may more than double to four million square feet this year, as more Indian residents buy online.

Revenues in Asia’s third-largest economy are expected to rise to between $1.5-$2 trillion over the next 10 years. India is already home to the third-largest population of Internet users in the world.

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