A Survey Report published on 30th November 2018 titled ‘Emerging Trends in Real Estate’has attributed India’s Goods and Services Tax (GST) as the major contributor to the boom in the infrastructure for logistics.
The 2019 survey covering the Asia Pacific region, was jointly undertaken with PwC and the Urban Land Institute. This can be due to the introduction of nation-wide common e-way bill mechanism, that relatively reduced the truck’s travel time by almost 20%, eliminating multiple checkpoints.
Further, this year, logistics infrastructure in emerging markets has also become a focus, given a near-complete lack of modern stock and rapidly-growing manufacturer sectors.
The report state that demand is booming in Vietnam, Indonesia, and especially India, where the mid-2017 introduction of goods and services tax (GST) has revolutionized how goods are delivered across the country.
Logistics is a niche sector where assets are considered to be a high-yielding alternative asset class and it continues to gain traction in the Asia Pacific region. Developers willingness to build new facilities without precommitments from tenants is the testament to the strength of the market.
A fast-growing trend is the development of last-mile delivery hubs, again as a means of tapping e-commerce growth. This implies demand for inner-city distribution centres, with investors looking in particular at the underused and lower-grade office, retail, and industrial spaces near city centres.
“There is a huge pipeline of demand for large build-to-suits because there is barely any ready-built demand” one investor claims.
The Indian market is another destination ripe for development projects: “The market is becoming institutional very quickly,” commented one opportunistic investor, and “development of office is where you want to be, selling into that.
Demand for office investment over there is very, very strong, and prices have gone up significantly over the last two or three years.” quotes the report.
The Report mentions that amongst emerging markets, India finally looks set to kick-start its domestic REIT industry. With the launch of a large portfolio of business properties early in 2019, over four years since regulators introduced domestic REIT legislation. REITs are mutual funds driven investment for developing real estates, the risk and return of which is diversified although high.
While India stood at the fourth position in submitting responses recording 14%, Singapore topped the list of Asian countries to have participated in the survey.