Coimbatore emerging as the distribution centre for the rest of Tamil Nadu

Coimbatore emerging as the distribution centre for the rest of Tamil Nadu
01/08/2017 , by , in News/Views

Coimbatore is increasingly preferred as a warehouse destination by several FMCG and consumer durable companies to supply to rest of Tamil Nadu (other than Chennai region), according to property consultants here.

With implementation of Goods and Services Tax, there is no tax at check-posts and there is uniform tax across the country. “In the last one month I have had seven to 10 enquiries,” said Jude Alex, a realtor here. The demand for space is for 60,000 sq.ft to 1.5 lakh sq.ft. and this is from FMCG, tyre and consumer durable companies.

The demand is huge and these companies do not mind opening warehouses in some of the rural areas of the district too. But, the space available is not much, he said.

Apart from large spaces, companies are looking out for 5,000 sq.ft to 10,000 sq.ft warehouses too.

According to JLL India, the demand for warehouse space in Coimbatore is there for almost five years and the enquiries started picking up about a year ago. The companies, however, are not clear about some of the GST issues. Hence, the enquiries are yet to be closed. Apart from FMCG goods, electronic companies also want warehouse space here.

Coimbatore has nearly a million sq.ft of warehouse space. However, just about 10 % has all the required approvals. There is a high demand and about five lakh sq.ft can be absorbed annually, if the area available has met all the required norms. The demand is expected to increase when there is clarity under GST.

These companies serve up to Madurai from Coimbatore. Some of the e-commerce companies have also set up warehouses in the city.

In the case of residential segment, the market is slow now. The demand might pick for residential units in a couple of months, according to an industry source.

The market for residential units is expected to be good from September as property promoters register under Real Estate (Regulation and Development) Act, according to JLL India.

Currently, very few projects that were completed three years ago are fully sold out. There is minimum 10 % unsold units in each project and at least 20 % units remain unoccupied. The preference is still for independent houses.

One main challenge here is that the average price is high for both, villas and apartment units. The price has to come down too.

Some of the realtors in the city also feel that there is no triggering factor for demand to pick up for residential units. The sales that is happening now is not for investment purpose but from direct customers.

The rentals have not grown and might not see an upward movement in the near future for residential units, they say.

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