Almost a month after the major pharmaceutical companies started making statements regarding the efficiency of their vaccines against Covid-19, another concern that sprung up is whether the commercial real estate sector is ready to meet the requirements for cold storage warehouses in India. Last week this concern was highlighted by the Prime Minister too when he asked states to commence working on cold storage facilities for future vaccine distribution plans. The distribution drive which has been speculated to take place over a year. A three-tier system would be required for this according to the centre’s directions.
The authorities had been trying to control the effect of the pandemic for a long time that the question of ascertaining the current cold storage situation perhaps did not even occur in most minds till the announcement was made. We had discussed how building new cold storage warehouses would not be an easy task in the article on the impact of e-commerce on cold storage warehouses in India. The cold chain is going to be one of the most challenging aspects of delivery of the vaccination. The strict guidelines for storage also create a tremendous logistical issue consisting of intelligent end-to-end temperature-controlled cold chain solutions to ensure the efficacy of the vaccines.
This tidal demand has opened up new avenues in the commercial real estate sector as well. The scope of investment in industrial warehouses has skyrocketed with both pharmaceutical and e-commerce sector relying on the warehousing sector. According to a report by Mordor Intelligence, the overall cold storage capacity in India is 226.7 lakh ton (lt) currently.
Once the vaccine gets approved by FDA, a cold storage boom is coming to revolutionise the real estate sector. This gives real estate investors a key opportunity to immerse in the cold storage investments and of course, like any investment, certain risk factors are attached to it. Developing and maintaining cold storage facilities can be expensive and these facilities will be most likely under scrutiny and regulation.
The possibility of the viability of Covid-19 medicines has proven to be a window of opportunity for the cold storage sector in India. With the heightened interest, the cold storages is expected to help in the resurgence of commercial real estate sector which took a big hit due to the pandemic. Along with the need to building new facilities and upgrade old ones, existing cold chain enterprises may also need to reallocate specific resources in their network pertaining to the current situation.