The warehousing sector is set to cross the 300 million square feet-mark by 2025, according to a new report jointly released by developers’ body CREDAI and realty data analysis platform CRE Matrix.
Currently, the overall Grade A warehousing stock in the country stands at 216.2 million square feet (msf).
“With e-commerce, retail expansion and global companies entering India, we foresee a robust demand and supply growth for Grade A warehouses,” said CREDAI president Boman Irani, adding that India’s favourable policies, competitive manufacturing costs and labor availability make it a prime investment destination.
Also Read: IKEA partners with Rhenus to set up warehouse in Delhi-NCR near Gurugram
Demand continued to surpass supply in the first quarter of the ongoing calendar year with an absorption to supply ratio of 1.4, alongside a 5% increase in rentals. Meanwhile Grade A/A+ vacancy levels declined 1.2% year-on-year across the top-6 cities, per the report.
“Q1 CY 2024’s 5% rental increase highlights the demand surge in this evolving asset class,” Irani underscored.
{{/usCountry}}“Q1 CY 2024’s 5% rental increase highlights the demand surge in this evolving asset class,” Irani underscored.
{{/usCountry}}Third party logistics players accounted for a 27% share in the overall demand during the March quarter, followed by manufacturing and e-commerce at 20% and 12%, respectively.
Pune, NCR account for 45% share in demand for A Grade warehousing
Geographically, Pune and the National Capital Region (NCR) accounted for a 45% share in demand for Grade A/A+ warehousing during the period, while the Mumbai Metropolitan Region (MMR) and NCR jointly had a demand touching 53% in the segment.
Also Read: Industrial and warehousing supply in Q1 2024 touches 7 mn sq ft, highest in last two years
The report also highlighted that MMR saw a 52% jump in supply during the first quarter of 2024, compared to the corresponding period last year.
According to the report, warehousing in India has been a preferred asset class for investors and developers owing to quicker production, higher revenue generation and lower risks. Additionally, policy support from the government including infrastructure status to the logistics sector, GST implementation, and permitting 100% FDI in warehousing and storage, has been a key contributor in attracting investments in this sector, the report noted.
Also Read: Logistics and industrial leasing crosses 50 mn sq ft mark in the last two years
“We are on the right track to achieve Grade A completions of 85 msf in the next 7 quarters to end 2025 with a 300 msf Grade A stock milestone,” said Abhishek Kiran Gupta, co-founder and chief executive of CRE Matrix and IndexTap.