India - Major Report - Resilience Redefined - Industrial - Logistics Stakeholder Survey - November 2020

RESILIENCE
REDEFINED
CBRE INDIA
I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y -
C O N N E C T I N G T H E D OT S B E T W E E N O C C U P I E R S ,
D E V E LO P E R S A N D I N V E S TO R S
NOVEMBER 2020
I&L STAKEHOLDER SURVEY OVERVIEW
The COVID-19 pandemic disrupted the I&L ecosystem with several structural and cyclical implications. CBRE India Research undertook a series of stakeholder surveys
during Q2 and Q3 2020 to understand the implications of this disruption with the commencement of ‘Unlock India 1.0’. About a 100 stakeholders participated in
these surveys and the analysis of their responses is given in subsequent sections.
SHARE OF SURVEY RESPONDENTS TABLE OF CONTENTS
I&L OCCUPIER SURVEY

Investors
1 RESULTS
15%
Occupiers
38%
I&L DEVELOPER SURVEY
2 RESULTS
Developers
47%
I&L INVESTOR SURVEY
3 RESULTS
Source: CBRE Research, Q4 2020
I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |2

1
WHAT ARE
2 OCCUPIERS
SAYING?
3
SUMMARY
The results of our survey revealed three key themes which would govern I&L occupiers in India post COVID-19
#1 SUPPLY CHAIN DISRUPTIONS #2 IMPACT ON RE DECISIONS #3 IMPACT ON WORK, WORKFORCE AND THE WAREHOUSE
46% 89% 84%

Preferred flexible Said that there would be no change in their Change in warehouse design and
warehouse space for future preferences from the pre-COVID-19 era focus on improving last-mile
leasing between tier I and II / III cities logistics as their long-term strategy
32% 75% 69%

Likely to invest in Highlighted that their top short- Highlighted that they will increase
strengthening supply term RE strategy was to expand, the implementation of tech
chain infrastructure albeit cautiously across the supply chain
27% 39% 65%

Likely to further invest in Highlighted an increase in their Highlighted higher occupancy
fulfilment centers small-to-medium sized costs and lack of quality spaces as
warehousing requirements top concerns following COVID-19
in the short term

SURVEY PROFILE
RESPONDENTS BY OCCUPIER SEGMENT RESPONDENTS BY OCCUPIER REGION
3% 5%
3%
11%
11%
38% 16% 41%
14%
14% 14% 32%
3PL E-commerce
Auto and auto ancillaries Electrical and electronics
Engineering & manufacturing firms FMCD Domestic EMEA Americas APAC
Pharmaceutical and healthcare Others

SUPPLY CHAIN
DISRUPTIONS

FINANCIAL IMPACT, RECESSION, MANPOWER AND MATERIAL EMERGE AS TOP CONCERNS
POST COVID-19
WHAT ARE YOUR TOP CONCERNS FOLLOWING THE COVID-19 THE ‘DUAL’ IMPACT ON I&L OCCUPIERS: SUPPLY CHAIN
OUTBREAK IN INDIA? DISRUPTIONS AND REGULATORY BOTTLENECKS
High
Concern Financial impact due to COVID-19
including effects on operations, future 52% Due to potential income losses as a result of trade restrictions
revenues and liquidity
Potential global / domestic recession 45%

Weaker macro-economic fundamentals resulted in global supply chains
becoming increasingly challenged, with greater nearshoring of manufacturing
operations and slowdown of consumer demand
Weak economic growth 35%
The prolonged lockdown and shutdown of factories led to a mass exodus of

Retaining migrant labour 35%
manpower in India
Initial restrictions on the inter-state movement of goods created roadblocks in

Sourcing raw materials 19%
transporting critical raw material
Adapting to frequent supply chain Frequently changing regulations during Lockdowns 1.0 - 4.0 and city / district
13% level restrictions during Unlock 1.0 and 2.0 often disrupted supply chains
disruptions
Low
Concern
Consequently, these disruptions led to occupiers considering more agile and resilient
warehousing solutions for operating in India.

FLEXIBLE WAREHOUSE SPACES ENTICING OCCUPIER FOCUS IN INDIA
TOWARDS WHICH I&L AVENUES WOULD YOUR LEASING

/ INVESTMENT PREFERENCE IMPROVE FOLLOWING THE TOP THREE I&L INVESTMENT AVENUES IN INDIA
COVID-19 OUTBREAK IN INDIA?
Construction delays and the intent to cater to ‘immediate’ demand resulted in

almost half of the occupiers looking to transact short-term lease contracts,
Investing in flexible FLEXIBLE
46% thereby preferring to invest in flexible warehouse spaces.
warehouse spaces WAREHOUSE
SPACES
Additionally, supply constraints would also provide occupiers the flexibility to
sub-let ‘white’ spaces in their warehouses.
Supply chain infrastructure 32%
About a third of the respondents highlighted that they are likely to invest in
strengthening the supply chain to mitigate risks by increasingly looking at:
Fulfillment centers 27%
• Near-shoring – Higher ‘essential’ demand led to occupiers focusing on
SUPPLY CHAIN
locating closer to demand centers, increasing their response time.
INFRASTRUCTURE
• Expanding distribution / sourcing networks to de-risk single source
Last-mile warehouses 14% reliance.
• Diversifying transport networks and increasing reliance on multi-modal
transport to negate inter-state restrictions.
First-mile warehouses 11%

The pandemic underscored the fragility of Just-In-Time (JIT) production and
FULFILMENT long-established lean practices. As a result, one-third of occupiers are expected
CENTERS to adopt the inventory model by investing in fulfilment centers, thereby
Increasing cold storage units 3% increasing their storage capabilities for months’ over weeks’ worth of goods.

I&L OCCUPIERS SHIFTING TOWARDS A NETWORKED SUPPLY CHAIN ECOSYSTEM IN INDIA
POST COVID-19
Historically, supply chain disruptions have risen either due to production / trade restrictions on the supply side or by variance in consumer sentiments on the demand
side. Most of the times, these disruptions have been confined to individual industries or markets, with supportive conditions enabling a relatively quick rebound from
any short-term shock.
ACCELERATION OF THE NETWORKED SUPPLY CHAIN ECOSYSTEM OVER A LINEAR MODEL POST COVID-19
PRE COVID-19: A TRADITIONAL LINEAR SYSTEM POST COVID-19: A NETWORKED SUPPLY CHAIN ECOSYSTEM
The COVID-19 While linear supply

pandemic was all- chains concentrated
encompassing as it on cost, speed,
caused a reliability and
simultaneous connectivity, a new
disruption in both networked supply
global supply and chain ecosystem
demand networks. emerged post the
pandemic.
Within the span of a
few months, serious This ecosystem is
flaws in supply chains expected to lay
were uncovered and equal emphasis on
questions were raised resilience, near-
over the viability of shoring capability,
long-accepted linear sustainability and
supply chain agility – a trend
practices. reflected in our
survey as well.

IMPACT ON RE
DECISIONS
(IMMEDIATELY
POST COVID-19)
I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 10

DELAYED / CANCELLED SITE VISITS AND DEFERRED EXPANSION PLANS IMPACTED I&L
LEASING DECISIONS IN THE SHORT TERM
How have your RE leasing decisions been impacted immediately following the COVID-19 outbreak in India?
Site visits delayed 32%
No change 30%
Localised travel restrictions
Expansion plans on hold 27% Immediate e-commerce
adversely impacted RE
requirements post Unlock
Site visits cancelled 24% leasing decisions and
1.0 led to an increase in
increased pent-up space
Consolidation plans on hold 11% space demand for 3PL
demand from e-commerce
players
Relocation plans on hold 11% players
Renewal decisions delayed 3%
SECTORAL BREAK-UP OF OCCUPIERS WHO INDICATED A SECTORAL BREAK-UP OF OCCUPIERS WHO INDICATED SECTORAL BREAK-UP OF OCCUPIERS WHO INDICATED
HOLD ON EXPANSION / CONSOLIDATION PLANS NO CHANGE IN RE DECISIONS DELAYS OR CANCELLATIONS IN SITE VISITS
3PL 33% Auto and auto 3PL 58%

27%
ancillaries
Engineering &
17% 3PL 18% E-commerce 25%
manufacturing firms
Electrical and Engineering &

Electrical and electronics 17% 18% 8%
electronics manufacturing firms

CHANGE IN SHORT-TERM RE STRATEGIES: CAUTIOUS EXPANSION PLANS
HAS YOUR SHORT-TERM RE STRATEGY FOR INDIA CHANGE IN SHORT-TERM RE STRATEGIES: A SECTORAL
CHANGED FOLLOWING THE COVID-19 OUTBREAK? VIEW OF OCCUPIERS
46%
3PL
23%
17%
E-commerce
8%
35% 13%
Engineering & manufacturing firms
8% E-tailers started witnessing a
strong surge in demand for
8%
Auto and auto ancillaries online shopping, both for
23%
essential and non-essential
0% items.
65% Pharmaceuticals & healthcare
8%
This resulted in the
8% expansion of I&L operations
Electrical and electronics
23% to be driven mainly by 3PL
4%
and e-commerce firms.
FMCD
0%
4%
Others
0%
Yes No, remained the same

Yes No, remained the same

SMALL-TO-MEDIUM SIZED SPACES MORE POPULAR IN THE SHORT TERM; CITY LEASING
PREFERENCES INTACT
HAS THERE BEEN A SHIFT IN YOUR WAREHOUSING SPACE HOW HAS THE COVID-19 OUTBREAK IMPACTED YOUR I&L LEASING
REQUIREMENT FOLLOWING COVID-19? PREFERENCES BETWEEN TIER I AND TIER II/III CITIES IN INDIA?
3%
5%
3% 3% Remained the same
Size less than 100,000 sq. ft. 39% 61%
Increased leasing preference
towards tier II and III cities
Increased leasing preference
towards tier I cities
Decreased preference towards
tier I cities
Size more than 100,000 sq. ft. 19% 81%
Yet to decide
89% Decreased leasing preference

towards tier II and III cities
Increased Same
About 89% of respondents said that there would be no change in their preferences from
During 2019, about 70% of the closed deals were in the ‘less than 100,000 sq. ft.’ the pre-COVID-19 era between tier I and II / III cities.
format; fast forward to now – almost 40% of the respondents highlighted that they
have an increased preference to lease ‘less than 100,000 sq. ft.’. This sentiment This could be because online shoppers in tier-II and smaller towns constituted more than
was mainly in the short term, due to a current lack of larger-sized spaces. half of all shoppers in India and accounted for three of every five orders received by
leading e-retail platforms.1
1 How India shops online, Bain & Company & Flipkart, June 2020

IMPACT ON
WORK,
WORKFORCE
AND
WAREHOUSES

WORKPLACE SAFETY PRIORITISED BY BOTH LANDLORDS AND OCCUPIERS
WHAT ARE THE PREVENTIVE MEASURES ADOPTED BY YOUR LANDLORD / OCCUPIER - DEVELOPER ALIGNMENT ON PREVENTIVE
ORGANISATION FOLLOWING THE COVID-19 OUTBREAK IN INDIA? MEASURES
Developer
Pandemic prevention material - procurement and
100% When we enquired about workplace safety solutions being offered, respondents
disposal
highlighted a ‘dual’ strategy – wherein developers would focus on common area
Additional cleaning procedures 100% preventive measures while occupiers would concentrate on in-house sanitization /
Contingency plan in case the location falls under preventive measures.
100%
containment zone
Some of the other relatively easier solutions would also include chalking out crew
Staggered entry / exits 100% scheduling and balancing programmes, deploying adequate personal protective
Disinfecting and restoring utilities, operations, equipment (PPE) and developing PPE standard operating procedures.
91%
workplace etc.
Occupier
Staggered entry / exits 100% The topmost priority of occupiers would be to make their employees feel safe at the
workplace and protect them from the risks of the virus spread. This would involve
Ensuring social distancing norms within the
warehouse / cafeteria
83% rethinking their work strategies across factory floors from a social distancing perspective
against the backdrop of production and warehouse environments.
Fumigation of warehouse 83%
As the I&L sector enters the ‘recovery’ phase, select occupiers also plan to ramp up
Additional cleaning procedures 72%
production / inventories; while others, such as automotive players, are set to restart
production. In both cases, manufacturing companies now need to make decisions on the
Contingency plan in case the location falls under 3 Ws – work, workforce, and the warehouse.
72%
containment zone

CHANGE IN WAREHOUSE DESIGN, BETTER LAST-MILE LOGISTICS AND INVENTORY
MANAGEMENT EMERGED AS THE TOP LONG-TERM STRATEGIES
How has your long-term RE strategy changed due to the COVID-19 outbreak in India?
Focus on improving last-mile logistics 84%
Change in warehouse design / spec 84%
Increased focus on inventory management 72%
Increased implementation of tech across the supply chain 69%
Automation of warehouses / industry units 51%

LOOKING
BEYOND
COVID-19

POST COVID-19, I&L REVENUES AND PORTFOLIOS TO GROW IN 2020 IN INDIA; MAINLY
LED BY 3PL OCCUPIERS
On an annual basis, what change do you expect in your company’s revenue and I&L portfolio in India in 2020?
REVENUE
5% 52% 24% 14% 5% On the flip side, only a select few

More than 80% of our global 3PL and auto & ancillary
respondents stated that they companies were sceptical about their
I&L PORTFOLIO
expect their revenues as well expansion plans, thereby divesting
as RE portfolios to continue 43% 33% 13% 3% towards other asset classes or
3% 3%
to grow in 2020. deferring decisions to 2021.
Grow by more than 30% Grow by 10-30% Grow by less than 10%
Flat Contract by less than 10% Contract by 10-30%
Contract by more than 30%
Segment-wise break-up of occupiers positive about their I&L revenues and portfolios in 2020
3PL 42% Backed by increasing e-commerce demand and

38% investment schemes such as Production-Linked
Electrical and electronics 15% Incentives (PLI); 3PL, e-commerce and electrical &
14% electronics occupiers appeared more optimistic
E-commerce 12% about their growth projections.
14%
Engineering & manufacturing firms 12% While the positive outlook of 3PL and e-commerce
11%
players was mainly driven by domestic firms,
Auto and auto ancillaries 8% global electrical & electronics firms expected their
14%
I&L revenues and portfolios to grow in 2020.
Pharmaceutical and healthcare 4%
3%
Revenue Portfolio Source: CBRE Research, Q4 2020

POST COVID-19: WHAT CHANGED FOR I&L OCCUPIERS IN INDIA?
IMPACT ON WORK, WORKFORCE AND
SUPPLY CHAIN DISRUPTIONS IMPACT ON RE DECISIONS
WAREHOUSES
✓ Occupiers had to meet short-term requirements via limited options

✓ Standard employee health and wellbeing
offered in investment / semi-investment grade spaces
✓ The ‘traditional’ linear supply chain ecosystem practices followed
THEN ✓ Increasing preferences towards larger spaces; ‘more than 50,000 sq.
was widely accepted which withstood the usual ✓ Occupiers were finalising their long-term
Pre-COVID-19 ft’ format dominated 2019 leasing
supply / demand shocks strategies which they were to implement in the
✓ Occupiers were optimistic about large-scale, long-term operations for
much-awaited upcoming investment-grade supply
expansion / consolidation in the much-awaited investment-grade
pipeline
✓ Occupiers to align with developers to take

✓ Short-term expansion to continue, but cautiously; mainly led by 3PL
pandemic-related safety measures – the former
and e-commerce players
✓ Flaws in the linear supply chain model were following safety protocols within warehouses, the
NOW ✓ Preferences for small-sized spaces (less than 50,000 sq. ft) increased
discovered as occupiers were unable to cater to latter incorporating these in common areas
Post COVID-19 in the short term to cater to near-shoring opportunities
the increasing consumer demand ✓ The pandemic led occupiers to accelerate their
✓ Site visits delayed / cancelled; long-term expansion / consolidation
long-term strategies for improving warehouse
plans on hold
efficiencies
✓ A ‘networked’ supply chain model is likely to be ✓ More focus on employee safety and wellbeing;
✓ Occupiers would increasingly opt for flexible leasing terms for
adopted by occupiers, which would be more pandemic prevention protocols to become a norm
catering to their short-term needs
resilient, sustainable and agile to external ✓ Long-term strategies that occupiers would
✓ We expect occupiers to increasingly prefer large-sized spaces, even
shocks implement in warehouses could include improving
NEXT more than 100,000 sq. ft.
✓ Occupiers would look to further invest in supply specifications, last-mile logistics and inventory
✓ Occupier demand to be inclined towards locating in investment-
chain infrastructure and fulfilment centers; select management; along with increasing investment in
grade, compliant spaces to meet long-term needs
occupiers to also increase investment in first and tech and flexible supply chains
last-mile warehouses

1
WHAT ARE
2 DEVELOPERS
SAYING?
3
SUMMARY
The results of our survey revealed three key themes which would govern I&L developers in India post COVID-19. It is to be noted that majority of the respondents
were domestic developers
#1 PROJECT MANAGEMENT DISRUPTIONS #2 IMPACT ON MANPOWER, MATERIAL AND MAINTENANCE #3 IMPACT ON RE DECISIONS
57% 89% 69%

Cited labour migration or Highlighted sanitization methods, wellness Cited an increase or stability in
unavailability of critical raw materials checks and ensuring social distancing norms occupier enquiries /
as top reasons for construction delays as top COVID-19 preventive measures inspections
53% 69% 56%

Expected a construction delay of Listed retaining migrant Were looking to further diversify I&L portfolios,
3-6 months in ongoing projects labour or sourcing raw investing mainly in fulfillment centers, first-
materials as top concerns post mile and last-mile warehouses; along with
COVID-19 cold storage units and data centers
38% 36% 40%

Expected a construction delay Were concerned about the Revealed a heightened interest to
of less than 3 months in deferment of occupiers’ partner with global investors or
ongoing projects leasing decisions developers

IMPACT ON
PROJECT
MANAGEMENT

A TRIGONAL IMPACT ON PROJECT MANAGEMENT LED TO CONSTRUCTION DELAYS
IF YOU BELIEVE THERE WOULD BE CONSTRUCTION DELAYS, PLEASE PROJECT MANAGEMENT DISRUPTIONS
RANK THE IMPACT OF THE FOLLOWING REASONS.
I&L developers reported a trigonal impact on project management due
to COVID-19:
Labour migration 33%
Unavailability of raw materials such as cement, steel, The lockdown and subsequent migration resulted in
24% LABOUR /
etc. a significant workforce shortage. Reverse migration
MANPOWER has been an uphill task for developers, with a third
SHORTAGE of our respondents citing it as the principle reason
Supply chain disruptions 18% for construction delays.
+
Delay in disbursing construction funding 11% Supply chain disruptions caused by national / state
SUPPLY
CHAIN / district-level lockdowns also delayed construction,
DISRUPTIONS resulting in the unavailability of critical raw
Untimely import of HVACs and other electrical materials / equipment.
9%
equipment
Delay in regulatory approvals 4%
DELAYED Deferment of fund disbursement and regulatory

Reduction in shifts due to increased sanitization / CONSTRUCTION approvals led to further construction delays.
social distancing norms / sudden containment 4%
zoning

A 3-6-MONTH DELAY IS LARGELY EXPECTED IN I&L PROJECT COMPLETIONS DUE TO
COVID-19
How much delay do you expect in the construction of ongoing I&L projects due to the COVID-19 outbreak in India?
0-3 months 38%
3-6 months 53%
More than 6 months 9%

IMPACT ON
MANPOWER,
MATERIAL AND
MAINTENANCE

SANITIZATION, SOCIAL DISTANCING AND WELLNESS MEASURES WIDELY ADOPTED BY
DEVELOPERS
What are the preventive measures deployed within your facility following the COVID-19 outbreak in India?
Disinfecting and restoring utilities operations, workplace, additional cleaning

89% Preventive measures
procedures, etc.
Ensuring social distancing norms 84% Social distancing measures
Everyday wellness checks 78% Wellness measures
Pandemic prevention - communication at site 69%
Setting up disinfection stations 62%
Pandemic prevention - material procurement and disposal 51%
Staggered entry / exits 49%

Contingency measures
Contingency plan in case the location falls under containment zone 38%
Implementing 14-day quarantine for workers returning from other districts /
36%
states
Provisions for isolation rooms 33%
Others 2%
As the I&L sector enters the ‘recovery’ phase, developers plan to restart construction activity and facilitate reverse migration of employees to achieve efficiencies. In both cases,
developers now need to make decisions on the 3 Ms – manpower, material, and maintenance.

IMPACT ON RE
DECISIONS

3PL AND E-COMMERCE OCCUPIERS CONTINUED TO LEAD I&L ENQUIRIES AND
INSPECTIONS POST COVID-19
WHAT CHANGE HAVE YOU WITNESSED IN I&L ENQUIRIES AND HAS THERE BEEN A CHANGE IN WAREHOUSING SPACE
INSPECTIONS FOLLOWING THE COVID-19 OUTBREAK IN INDIA REQUIREMENTS OF OCCUPIERS FOLLOWING THE COVID-19
(FROM MID-MARCH ONWARDS) AS COMPARED TO LAST YEAR? OUTBREAK IN INDIA
About 65% of Growing consumer

the respondents Growth of 10-30% 24% demand, construction
highlighted that delays and change in
occupier business models from
enquires / ‘just-in-time’ to 3PL 44% 40% 16%
inspections inventory-led delivery led
either remained Growth of less than 10% to rising I&L enquiries /
24%
stable or inspections.
increased
marginally post
COVID-19.
Flat 21%
E-tailers’ requirements
for on-demand
warehouses and the
need for delivery E-commerce 69% 29% 2%
partners to bridge the
Reduction of less than 10% 15% growing supply-demand
gap led to higher I&L
enquires / inspections.
Reduction of 10-30% 15%

Increased Same Decreased

CORE WAREHOUSING REMAINS THE TOP PREFERENCE OF I&L DEVELOPERS
ARE YOU LOOKING TO FURTHER DIVERSIFY YOUR CURRENT IF YES, WHICH OF THE FOLLOWING SEGMENTS WOULD YOU
I&L PORTFOLIO IN 2020-21, FOLLOWING THE COVID-19 HAVE AN INCREASING PREFERENCE TOWARDS?
OUTBREAK IN INDIA?
Increasing new supplier addition
and growing demand for on-time
42% delivery are expected to boost e-
commerce players’ appetite for
fulfilment centers.
13%
38%
As e-tailers are looking to locate
closer to both supply and
demand centers, the need for
31% first- and last-mile warehouses is
gaining prominence.
1
56%
31%
18%
Fulfillment centers
11% First-mile warehouses

Last-mile warehouses
Cold storage facilities
Data centers
2%
Others
Yes No Not Sure

GROWING APPETITE FOR INVESTOR PARTNERSHIPS
HAS THERE BEEN A CHANGE IN PREFERENCE TOWARDS IF YES, WHICH OF THE FOLLOWING ROUTES WOULD YOU
FUTURE INVESTMENT ROUTES? HAVE AN INCREASING PREFERENCE FOR?
Partnership with global investors 25%

Almost a third of our
respondents said they
would continue to opt
Partnership with domestic
for the same pre- 23%
landlords
COVID-19 investment 29%
route, with the I&L 40% of
sector attracting more Partnership with domestic respondents
than USD 0.6* billion
40% investors
15% want to partner
over the last three with global
years. investors or
Partnership with global developers.
developers
15%
Forward sale agreements 13%
31%
Inclusion of present I&L assets
as part of future REIT portfolios
4%
Asset divestment following

construction completion
4%
Yes Not Sure No

*Real Capital Analytics, CBRE Research, Q4 2020
FLEXIBILITY IN LEASE TERMS TO ATTRACT OCCUPIERS EMERGED AS THE TOP LONG-TERM
RE STRATEGY
OCCUPIER-DEVELOPER ALIGNMENT OF LONG-TERM RE HOW HAS YOUR LONG-TERM RE STRATEGY CHANGED DUE
STRATEGIES TO THE COVID-19 OUTBREAK IN INDIA?
During our occupier interactions, it

was noted that construction delays
and the intent to cater to ‘immediate’ A win-win situation for
demand had resulted in almost half of both stakeholders as Increasing flexibility in leasing
DEVELOPERS
39%
OCCUPIERS
them looking to transact short-term almost 40% of agreements

lease contracts, and thereby preferring developers would
FLEXIBILITY to invest in flexible warehouse spaces. increase flexibility in
Additionally, supply constraints would lease terms in line with
also provide occupiers the flexibility to occupier demand
sub-let ‘white’ spaces in their
warehouses.
Increasing preference towards tier II
22%
and III cities
In line with the

Our investor respondents response from
(whose portfolios are occupiers on their
DEVELOPERS
INVESTORS
already in tier I cities) expansion plans in tier Diversifying RE portfolios to include

CITY mentioned an increased II / III cities, about one- other asset classes such as office, 17%
PREFERENCES interest towards exploring third of the developers retail, etc.
tier II and III cities post also highlighted that
COVID-19, similar to our their preference
developer respondents. towards these cities
would increase.

LOOKING
BEYOND
COVID-19

POST COVID-19: WHAT CHANGED FOR I&L DEVELOPERS IN INDIA
IMPACT ON MANPOWER, MATERIAL

PROJECT MANAGEMENT DISRUPTIONS IMPACT ON RE DECISIONS
AND MAINTENANCE
✓ Leasing demand in India was mainly led by 3PL and e-
✓ Any project management disruptions that incurred were mainly commerce players, followed by engineering & manufacturing
✓ Standard health and wellbeing practices
THEN local such as delayed regulatory approvals firms
Pre-COVID-19 ✓ Project maintenance as per SOPs
✓ Global supply chain linkages were relatively sufficient ✓ I&L portfolios of developers mainly consisted of fulfilment
centers to cater to 3PL and e-commerce firms
✓ Heightened demand from e-commerce and 3PL players; short-

✓ Stringent health and safety protocols term reduction in demand from engineering & manufacturing
✓ Localised disruptions now also include labour shortages due to
adopted firms
the recent large-scale migration
NOW
Post COVID-19 ✓ COVID-19 preventive measures and ✓ Developers looking to diversify their I&L portfolios by increasing
✓ Global supply chain linkages were questioned due to the
contingency protocols implemented the share of first- and last-mile warehouses; a select few may
shortage of critical raw material, leading to delayed construction
even explore tier II/ III cities, cold storage facilities and data
centers
✓ Issues brought out by labour migration / reverse migration likely ✓ Anticipated rise in occupier demand from most players to result
✓ Employee safety and wellbeing to be at the
to result in developers increasingly opting for automation of in developers becoming more accommodative, willing to offer
forefront; we expect PM services may
construction processes higher flexibility of leasing terms
become more tech-enhanced
NEXT
✓ Weakness of current global supply chains likely to result in ✓ Further diversification of I&L portfolios likely to occur; could take
✓ Pandemic-related protocols to become a
developers diversifying their previously accepted singular the form of partnership with global / domestic investors; a select
norm
dependence on China few may also consider forward sale agreements

1
WHAT ARE
2 INVESTORS
SAYING?
3
SUMMARY
The results of our survey revealed three key themes which would govern I&L investors in India post COVID-19
#1 INVESTOR INTENTIONS #2 INVESTOR STRATEGIES #3 INVESTMENT ROUTESS
71% 86% 67%

Expect investment activity to revive Would prefer to invest in Highly prefer greenfield project
to ‘business as usual’ in 6-12 opportunistic assets post acquisitions post COVID-19
months in India COVID-19
64% 43% 58%

Cited income stability as the key Would prefer to invest in Moderately prefer portfolio
reason for investing in I&L assets post distressed assets post acquisitions post COVID-19
COVID-19 COVID-19
14% 36% 50%

Highlighted data centers as a Would prefer to invest in Highly prefer undertaking a JV/ JD
‘highly preferred’ alternate prime / core assets with organized developers
asset class for investment post post COVID-19 post COVID-19
COVID-19

SURVEY PROFILE
The results of our survey revealed three key themes which would govern I&L occupiers in India post COVID-19
INVESTOR PROFILE BY TYPE INVESTOR PROFILE BY REGION
7%
21% 21%
43%
43%
29%
36%
Developer Property fund Corporation

Americas APAC Domestic EMEA

INVESTOR
INTENTIONS,
STRATEGIES AND
INVESTMENT
ROUTES

I&L-FOCUSED INVESTORS WOULD NOW CONSIDER DATA CENTERS AND OTHER
ALTERNATE ASSETS IN INDIA
Post COVID-19, has there been a shift in your investment intentions with respect to the following real estate segments in India?
Highly
Preferred
Pre-COVID Post-COVID
INVESTOR-DEVELOPER ALIGNMENT
Industrial & Logistics
Industrial & Logistics OF INVESTMENT INTENTIONS
100% When we interacted with developers, 56% mentioned

71% 29% they wanted to further diversify their I&L portfolios to
include options such as data centers
Data Centres
Data Centres
Increased demand for data centers on the back of rise
50% 50% of OTT platforms, adoption of cloud-based platforms
14% 43% 43%
and increasing internet penetration in India
Other alternate segments

Other alternate segments
including student housing,
including student housing,
flexible spaces, co-living,
25% 75% flexible spaces, co-living, senior Driven by increasing investor intent towards
senior living etc. 14% 86%
living etc. opportunistic assets in India
Less When we asked these I&L-focused investors about other asset classes (including office, residential and retail), they said that their post COVID-19 intentions
Preferred remained the same

I&L-FOCUSED INVESTORS WOULD BE INTERESTED IN FULFILLMENT CENTERS, FIRST-MILE
WAREHOUSES AND COLD STORAGE FACILITIES IN INDIA
What are the key reasons for a heightened interest in the I&L segment, especially post COVID-19?
Within the I&L supply chain, will the following segments be a Within the I&L supply chain, what will be the typical
part of your investment portfolio post COVID-19 in India? segmentation (share in I&L portfolio) of your investment across
the following options*?
Fulfilment centers 50% Fulfilment centers 43% 43% 14%
First-mile warehouses 43% First-mile warehouses 67% 33%
Cold storage facilities 43% Cold storage facilities 83% 17%
Supply chain infrastructure 36% Supply chain infrastructure 20% 60% 20%
Last-mile warehouses 21% Last-mile warehouses 67% 33%

Data centers 50% 50%
Data centers 14%
Tech to improve warehouse / fleet management 100%
Tech to improve warehouse / fleet
management 7%
Cold storage transport infrastructure 100%
Cold storage transport infrastructure 7%
0-20% share 21-40% share 41-60% share 61-80% share 81-100% share

STABLE INCOME CITED AS A KEY REASON FOR HEIGHTENED INTEREST IN I&L ASSETS
What are the key reasons for a heightened interest in the I&L segment, especially post COVID-19?
Income stream stability 64% Mostly felt by global property funds,

developers and corporations
Sustained occupier demand, especially from e-commerce Driven mainly by domestic developers and
36%
firms American respondents
Asset class diversification 29% Stated by mainly global property funds
Rise in investible assets 21% Opined by mainly global property funds
Higher cap rates 14%

Stated by only domestic developers
Other reasons stated by select respondents included improved developer-investor partnership opportunities, state incentives offered for the sector and rising global interest towards
India’s Free Trade and Warehousing Zones (FTWZs).

STRONG DEMAND FOR I&L ASSETS LEADING INVESTORS TO LOOK FOR
OPPORTUNISTIC DEALS
What is your preferred investment strategy for I&L investments following the COVID-19 outbreak in India?
Mostly felt by global property funds, developers and

Investing in opportunistic assets 86%
corporations
Driven mainly by global property funds, followed by

Investing in distressed assets 43%
domestic corporations
Investing in prime / core assets 36% Led mainly by global property funds
Investing in value-add assets 14% Cited only by American property funds
Investing in core plus / quality secondary assets 7%
INVESTOR-DEVELOPER ALIGNMENT ON Our investor respondents (whose portfolios are already in tier I cities) mentioned an increased interest towards exploring tier
OPPORTUNISTIC INVESTMENT STRATEGIES II and III cities post COVID-19, similar to our developer respondents.

GREENFIELD ACQUISITIONS AND PARTNERSHIPS TOP I&L INVESTMENT ROUTE EVEN POST
COVID-19
What would be your preferred investment route for acquiring I&L assets following the COVID-19 outbreak in India?
Greenfield project acquisitions 67% 33% Highly preferred by developers, corporations and global
property funds
JV / JD with organised developers 50% 33% 17% Highly preferred by developers and global property funds
Highly preferred by global property funds and moderately by

Portfolio acquisitions 25% 58% 17%
developers and domestic corporations
Brownfield project acquisitions 25% 75% Highly preferred by only global property funds and moderately by
developers and corporations
Debt funding of projects 25% 8% 67% Highly preferred by only corporations
Equity funding of projects 92% 8% Moderately preferred by almost all respondents
Highly preferred Moderately preferred Less preferred
INVESTOR-DEVELOPER ALIGNMENT OF 40% of our developer respondents also displayed an increasing preference to partner with domestic or global investors as a
INVESTMENT ROUTES future investment route post COVID-19, similar to investors (as shown above).

LOOKING
BEYOND
COVID-19

INVESTMENT ACTIVITY LIKELY TO RECOVER TO PRE-PANDEMIC LEVELS BY 2021
Compared to H1 2020, how do you expect the investment How long do you think will it take for the investment activity to
environment to be in H2 2020 in India? revive to ‘business as usual’ post the Covid-19 outbreak?
Mainly stated by
Mostly felt by developers and
About the same 64% developers and corporations,
global property 6-12 months 71% followed by select
funds global property
funds
Mainly cited by
Better 21%
select American
respondents
Opined mostly
29% by global
More than 12 months
property funds
Chosen by only
Worse 14% domestic
respondents

POST COVID-19: WHAT CHANGED FOR I&L INVESTORS IN INDIA
INVESTOR INTENTIONS INVESTOR STRATEGIES INVESTMENT ROUTES
✓ Investor interest was primarily focused towards ✓ Lack of investible options in India resulted in the prime
THEN
only brownfield office and retail along with ✓ Investment in the I&L sector was mainly opportunistic investment route in the I&L sector to be ‘greenfield’, mainly
Pre-COVID-
residential assets; shifted to include I&L due to the lack of investible options through JV / JD partnerships or select instances of portfolio
19
particularly post policy reforms acquisitions
NOW ✓ Investor strategies for the I&L sector are largely ✓ Investment routes in the I&L sector remain largely unchanged;
✓ Investor intent towards the I&L sector is largely
Post COVID- unchanged; there is a higher preference towards heightened preference towards greenfield acquisitions and JV
unchanged; sentiments remain positive
19 opportunistic assets / JD partnerships
✓ Investor focus to be on I&L assets that offer

income stability, specially backed by sustained ✓ Greenfield acquisitions to remain the prime investment route
✓ Opportunistic assets to remain the key strategy for
demand from e-commerce firms for I&L-focused investors; mainly via developer-investor
I&L-focused investors; select ones already present in
partnerships
tier I cities may even explore tier II / III cities
NEXT ✓ Investors want to further diversify their I&L
portfolios to include fulfillment centers, first- ✓ Select I&L-focused investors may also consider brownfield or
✓ Select I&L-focused investors may also consider
and last-mile warehouses, data centers and portfolio acquisitions
distressed or prime / core assets in other sectors
cold storage facilities

POST COVID-19
OUTLOOK
POST COVID-19: THE I&L SECTOR OUTLOOK FOR INDIA IS POSITIVE
A pandemic or any other shock to the economy results in two types of changes to any real estate sector:
a. Cyclical changes, which have short-term effects – these involve the sector absorbing the impact of the shock such as rental dip or a rise in vacancies; these tend to fade away with time as the
economy / sector recover.
b. Structural changes, which have long-term effects – they have a permanent impact on the real estate sector which would not recede even after the economy / sector recover. In the case of the I&L
sector, our surveys revealed this change to be an increased preference of stakeholders to diversify or include a ‘flexible’ element in their portfolios
IS THE IMPACT OF
EXPECTED CYCLICAL IMPACT OF A NEGATIVE COVID-19 ON THE LONG-TERM OUTLOOK FOR THE
STAKEHOLDER WHY – WHAT’S HAPPENING IN INDIA?
ECONOMIC SHOCK ON THE REAL ESTATE SECTOR I&L SECTOR IN INDIA I&L SECTOR IN INDIA
SIMILAR?
Potential immediate impact: Delays in supply resulted in a lack of ready-to-move-in Positive

Yes
Drop in leasing activity spaces We expect leasing activity to rise
across cities in India in 2021-22 due
Potential short-term impact: On the contrary, they temporarily increased their
I&L OCCUPIERS to the pandemic as occupiers are
Delay in expansion plans; adopt a ‘wait-and-watch’ No demand of small-sized spaces; cautiously expanding in
likely to switch to inventory models
mode the short-term as well
and cater to the heightened e-tail
Potential long-term impact: Heightened increase in demand for larger spaces via demand; thereby further expanding
No
Relook at expansion / consolidation plans pre-leasing their RE portfolios
Occupier demand to service new-found nearshoring

Potential immediate impact:
No opportunities resulted in lower vacancies in well-located
Increase in vacancies Positive
projects
We expect supply completions / new
Significant project management / supply chain
Potential short-term impact: launches to rise on the back of
I&L DEVELOPERS Yes disruptions; reverse labour migration in the country has
Delay in construction activity of ongoing projects increased investor interest towards
taken time
greenfield acquisitions and JV / JD
Potential long-term impact: A large share of the pipeline consists of institutional
partnerships from leading players
Increased supply slippage beyond 2021-22 / delay in No investment-backed projects which were already near
new launches completion

POST COVID-19: THE I&L SECTOR OUTLOOK FOR INDIA IS POSITIVE
IS THE IMPACT OF
EXPECTED CYCLICAL IMPACT OF A NEGATIVE COVID-19 ON THE LONG-TERM OUTLOOK FOR THE
STAKEHOLDER WHY – WHAT’S HAPPENING IN INDIA?
ECONOMIC SHOCK ON THE REAL ESTATE SECTOR I&L SECTOR IN INDIA I&L SECTOR IN INDIA
SIMILAR ?
Potential immediate impact: Sustained occupier demand coupled with already low Positive
No
Rents would fall vacancies
We expect an increase in the quantum
Potential short-term impact: Investor interest towards this sector has further risen post of I&L investment in India, both
No through present players further
Cap rates would rise COVID-19, preventing any current change in cap rates
I&L INVESTORS funding / launching new projects or
new players entering India via the JV /
On the contrary, investors have indicated a heightened JD route.
Potential long-term impact: Moreover, we also expect rents to
interest towards investing in the I&L sector by increasing
RE portfolio diversification to other sectors such as No further rise due to the increased
the share of fulfillment centers, first-mile warehouses,
office, retail and residential demand / improved quality of projects
data centers, cold storage facilities etc.
delivered going forward.
A key structural change has also occurred due to COVID-19, the impact of which can be seen on all stakeholders in India:
GLOBAL SUPPLY CHAIN FLEXIBILITY IN LEASING TERMS / I&L PORTFOLIO DIVERSIFICATION IMPACT ON THE I&L SECTOR
STAKEHOLDER
DIVERSIFICATION TENURES IN INDIA OUTLOOK IN INDIA
I&L OCCUPIERS ✓ ✓ ✓ Positive
I&L DEVELOPERS ✓ ✓ ✓ Positive
I&L INVESTORS - - ✓ Positive

For more information about this regional major report, please contact:
RESEARCH BUSINESS LINE
Abhinav Joshi Sachi Goel Raaj Thilak Raveendran Ram Chandnani

Head – Research, India, Middle East & North Africa Senior General Manager Deputy General Manager Managing Director – A&T, India
abhinav.joshi@cbre.co.in sachi.goel@cbre.co.in raajthilak.raveendran@cbre.co.in ram.chandnani@cbre.co.in
Karthiga Ravindran Sarath Chandra Praveen Jasmine Singh

Assistant Manager Analyst Senior Executive Director – A&T, India
karthiga.ravindran@cbre.com chilukuri.sarathchandrapraveen@cbre.com jasmine.singh@cbre.co.in
For more information regarding global research, please contact:

Richard Barkham, Ph.D., MRICS Henry Chin, Ph.D.
Global Chief Economist & Head of Research Global Head of Investor Thought Leadership and
richard.barkham@cbre.com Head of Research, APAC
henry.chin@cbre.com.hk
Neil Blake, Ph.D. Spencer Levy

Head of Forecasting & Analytics, Global Chairman & Senior Economic Advisor, Americas Research
neil.blake@cbre.com. spencer.levy@cbre.com
Follow CBRE
CBRE RESEARCH
This report was prepared by the CBRE Asia Pacific Research Team, which forms part of CBRE Research—a network of preeminent researchers who collaborate to provide real estate market research and econometric forecasting to real estate.
All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its
accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only exclusively
for CBRE clients and professionals; and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any
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using or relying on information in this publication.
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© 2020 CBRE, Inc. Source: CBRE Research, Q4 2020

India - Major Report - Resilience Redefined - Industrial - Logistics Stakeholder Survey - November 2020

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India - Major Report - Resilience Redefined - Industrial - Logistics Stakeholder Survey - November 2020

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RESILIENCE

SHARE OF SURVEY RESPONDENTS TABLE OF CONTENTS

I&L OCCUPIER SURVEY

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |2

46% 89% 84%

32% 75% 69%

27% 39% 65%

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |4

RESPONDENTS BY OCCUPIER SEGMENT RESPONDENTS BY OCCUPIER REGION

14% 14% 32%

Pharmaceutical and healthcare Others

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |5

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |6

Potential global / domestic recession 45%

The prolonged lockdown and shutdown of factories led to a mass exodus of

Initial restrictions on the inter-state movement of goods created roadblocks in

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |7

TOWARDS WHICH I&L AVENUES WOULD YOUR LEASING

Construction delays and the intent to cater to ‘immediate’ demand resulted in

First-mile warehouses 11%

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |8

The COVID-19 While linear supply

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. |9

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 10

Site visits delayed 32%

3PL 33% Auto and auto 3PL 58%

Electrical and Engineering &

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 11

Yes No, remained the same

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 12

89% Decreased leasing preference

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 13

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 14

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 15

Focus on improving last-mile logistics 84%

Change in warehouse design / spec 84%

Increased focus on inventory management 72%

Increased implementation of tech across the supply chain 69%

Automation of warehouses / industry units 51%

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 16

Source: CBRE Research, Q4 2020

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 17

5% 52% 24% 14% 5% On the flip side, only a select few

3PL 42% Backed by increasing e-commerce demand and

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 18

✓ Occupiers had to meet short-term requirements via limited options

✓ Occupiers to align with developers to take

I N D I A I N D U S T R I A L & L O G I S T I C S S TA K E H O L D E R S U R V E Y © 2020 CBRE, INC. | 19

57% 89% 69%

53% 69% 56%

38% 36% 40%