India’s Cold Storage Real Estate (RE) capacity likely to double by 2023: CBRE Report
The overall CS RE stock of in the country is estimated to reach 1,400 – 1,500 million sq. ft. by 2023.
CBRE South Asia Pvt. Ltd., India’s leading real estate consulting firm, has released its comprehensive findings on the Cold Storage (CS) segment in the country and the factors which would lead to its robust growth. The findings by CBRE stated that the CS segment in India is expected to witness significant growth over the next few years on the back of a strong consumer and industrial base. Following the COVID-19 outbreak, the demand for CS is also being further fuelled by a wider Omni-channel distribution of F&G across tier I and tier II cities in the country.
Further, the cold chain network would also play a vital role in reducing the loss of the produce and improving CS efficiencies. States including Andhra Pradesh, Telangana, Uttar Pradesh, West Bengal, Gujarat, Punjab, Bihar, Madhya Pradesh, Maharashtra, Haryana and Karnataka accounted for 91% of the total CS capacity in India in 2019. The overall CS RE stock of in the country is estimated to reach 1,400 – 1,500 million sq. ft. by 2023.
Anshuman Magazine, Chairman, India & South East Asia, Middle East & Africa, CBRE said, “CS facilities play an integral role in improving the shelf life of products and are an important enabler for several industries working across fresh food production and delivery; along with healthcare and other products such as flowers and chemicals. Considering the potential of the CS segment in the country, we expect that consumer/industry-led factors in India would continue to attract the interest of leading players in the coming years.”
Abhinav Joshi, Head of Research, CBRE India, further added, “Increasing urbanization and a rise in retail food processing have been accelerating the demand for products that need efficient CS facilities. Local grocery and departmental stores are also becoming smarter and developing innovative ways to deliver food, thus expanding the market for OFD services and consequently CS facilities.
Growth drivers of the Indian CS segment
The growing preference for healthier food without preservatives by the young and working-age population would boost the need for CS facilities. Additionally, traditional preferences in India have always been higher for fresh produce, thereby further driving the need for setting up CS facilities closer to residential areas
The emergence of the ‘cloud kitchen’ concept is also likely to boost demand for CS facilities.
The size of the online F&G retail industry is likely to quadruple by 2022; and the size of the dairy industry is likely to more than double by 2023.
Government initiatives to reduce post-harvest waste, encourage investment and improve logistics efficiencies are also expected to boost the overall CS capacity, value and RE stock.
The projected growth of F&G, online F&G, dairy, food processing and pharma industries over the next few years is thus likely to drive demand for CS and reduce product wastage. CS facilities are also integral for promotion of the rural economy as they would link the marketplaces across all locations.