Suddenly, everything seems to be pointing to a potential surge in Real Estate sector. Monsoon, FDI, GST, REIT, 9th Pay Commission, … everything seems to be only pointing to an unprecedented growth in realty.

And what a change it highlights: From a situation of “nothing is right” for the sector as of Yesterday to Today’s “everything is bright and sunny”, the change in perception is quite drastic.

And if these are perceptions, so what is the reality? Quite the middling path actually. Things weren’t as bad yesterday and aren’t as sunny as today.

For quite some time now, the real estate sector has been looking for a lifeline. The downturn, lack of funds, Issues with overcapacity and under sales in the erstwhile growth-hubs, as well as falling prices have left the sector gasping for breath. It is a sad situation for the industry which once was touted as the sunrise sector along with education.

So will all the above inputs really impact the real estate sector’s fortunes in the immediate term? Not really!

Yes the growth will come from FDI, REITs and others, but only in the longer term.

Surprisingly, the sector, which has mostly been judged by the volumes in the residential segment, is suddenly getting a boost now from a surprising quarter: Warehousing and Logistics(W&L) segment. The numbers that have been forthcoming in this segment are staggering and have the potential to really spur the Realty sector.

I’d like to believe that the real triggers for growth for W&L segment are Government programs like “Make in India” and “Infrastructure Development projects”, but in reality I see not enough traction from these segments as yet on the ground level.

Surprisingly, the catalysts are from two “unlikely” segments – Retail(or e-Retail, to be precise) and the recent GST announcements.GST is spelt as the real game-changer for the W&L segment with the biggies in the segment already talking about expanding capacities. Both of these combined by the impetus provided by Railways which is talking about humongous investments in the W&L segment in the immediate future, are suddenly being seen as good news for the real estate sector.

The sheer investments envisaged are mammoth and can actually make the sector seem attractive to investors too. The high growth optimism is already attracting both foreign investors as well as PE firms, sensing a vast opportunity in the growth momentum.

And there are reasons why the investors are finding this segment more lucrative than the other segments. There is a huge volatility associated with the residential segment, which is not there in the W&L segment. The stability of the segment and huge lease potential is also a sure winner for a risk-averse REIT.

According to some numbers I have read, the demand in W&L segment is expected to touch 125 m sq ft in the coming 5 years. The optimism could actually become an understatement, if the indications that the Government will allow 100%  FDI in eCommerce actually come true.

“Make in India” will also spur the Manufacturing sector demand and the requirements for the segment will increase many-fold.

And with the growth in the segment, the eventual beneficiary will be the real estate sector. The W&L segment could well be the one thing that can re-write the real estate growth story!