India’s warehousing sector shows robust growth at 25 per cent

V Nagarajan

In what could be a key indicator of consumer demand and growing confidence, the Indian warehousing sector has shown a robust growth at 25 per cent y-o-y with the total warehousing space at 211 million sq. ft. at the end-2019 compared to 169 million sq. ft., a year ago.

The total warehousing stock of India is expected to cross 375 million sq ft by 2023 with an increased share of Grade A stocks. Strong demand is expected to drive the market absorption and keep the vacancy level below 10 per cent, according to JLL survey.

Industrial Services in 2019 witnessed a 15 per cent y-o-y growth in total net absorption in Grade A & B warehousing space in top eight cities. The Delhi NCR region followed by Mumbai and Bengaluru remained the top three cities in terms of warehouse space absorption last year. These three cities together account for more than 20 million sq. ft of absorption. Interestingly, other cities such as Kolkata, Chennai and Pune continued their strong show.

 The market has also witnessed 3PL (third party logistics) emerging as the largest occupier of space as the sector received two pronged growth: one from the sector’s self-expansion and other from demands transcending form other sectors who are shifting to asset or less liability or asset light model of leases through 3PL players.

Given that transportation, contribute to a significant operation cost of logistics, if the infrastructure challenges are addressed, India’s logistics and warehousing sector will see significant growth, and foreign capital will remain an integral part of this.

Larger funds and developers willing to create a mark in the bigger spectrum of Indian warehousing are evaluating regional developments having strong tenant profile with a combination of land and stabilised assets. It provides them with the opportunity of having a stable source of financials from the existing occupiers while they are also able to build and create inventory in future years catering to the upcoming demand.

I am owning two residential properties jointly with my wife in India. We are planning to sell one property to invest in a larger unit. What are the long-term capital gains tax implications and how to minimise liability? Arvind, Sharjah.

Assuming that both of you are the co-owners and have undivided rights and have contributed funds for the acquisition of the two residential units, both of you will be liable to contribute long-term capital gains tax on the transfer of your rights if the properties are held for a period of two years or more.

As far as the liability for payment of long-term capital gains tax is concerned, it will depend upon the ratio of holding in both the properties and each one will have to compute individually the liability for payment of long-term capital gains tax. If you reinvest the capital gains amount in the purchase of a larger unit, you can avoid capital gains tax subject to the conditions stipulated in section 54.

I am due to lease my apartment in Noida. Is registration of rental agreement compulsory? Gupta, Dubai.

If the agreement is more than 11 months, registration of rental agreement in Greater Noida is mandatory. The agreement has to be on stamp paper and registered with the sub registrar’s office. The advantage is that if the tenant doesn’t vacate the premise after signing the agreement within the specified time-frame, you have the right to file a complaint in the nearest police station who will organise to vacate your premise.

What is the amount of TDS involved while buying a house in Bengaluru now? Arvind Jain, Dubai

Before Sept.1, 2019 if a buyer invests in a house worth Rs4.8 million, there is exemption as TDS is charged for properties priced over Rs 5million at the rate of 1 per cent.

After September 1, 2019, all additional charges such as club membership fee, car parking fee, electricity or water facility fee, maintenance fee, would be added to the total cost of the property. If the overall cost of the flat exceeds Rs5 million, you will have to pay TDS.