India’s warehousing sector sees strong growth in 2024

According to Vestian, the first half of the year saw an 8% rise in warehousing and logistics absorption to 16.6 million sq ft. However, this marks a 26% decrease from the second half of 2023, mainly due to a 74% drop in the NCR region. Mumbai and Pune led the absorption, with third-party logistics companies dominating. The sector attracted USD 1.6 billion in investments, accounting for 42% of total institutional investment in real estate.

Image Source: Freepik

In the first half of this year, warehousing and logistics absorption rose by 8%, totaling 16.6 million sq ft, as per the latest office market report from Vestian, a US-based workplace solutions firm.

However, this is a 26% decline compared to the second half (H2) of 2023. This decrease is primarily attributed to a sharp 74% drop in absorption in the NCR region, as noted in the report.

The combined markets of Mumbai and Pune contributed 63% of the total absorption in the first half (H1) of this year, with southern cities (Bengaluru, Chennai, and Hyderabad) accounting for 29%. Remarkably, Mumbai’s share increased from 25% in H1 2023 to 41% in H1 2024, driven by a growing demand for grade-A warehouses in regions like Bhiwandi, Panvel, Uran, Taloja, and Ambernath. Conversely, NCR’s share fell sharply from 31% to 6% during the same timeframe.

Third-party logistics companies led the absorption with a 39% share in H1 2024, up from 26% in H1 2023. The sectors of Engineering, Manufacturing, Automobiles, and Auto Components also saw their shares grow, rising from 16% and 4% in H1 2023 to 22 percent and 9% in H1 2024, respectively.

The sector saw an influx of investments totaling USD 1.6 billion in H1 2024, representing 42% of all institutional investments in the real estate sector. With major economies resuming growth and foreign investor interest in India’s warehousing sector on the rise, investments in H1 2024 matched one-third of the total institutional investment garnered over the last four years.

Furthermore, investments in H1 2024 increased by 4.5 times compared to H1 2023.

Shrinivas Rao, FRICS, CEO, Vestian said, “As participation of foreign investors increased, availability of funds eased in the sector. Moreover, recent government announcements to boost infrastructure developments are likely to reduce logistics costs from 8-9% to 5-6% of the GDP, which in turn will lead to an increase in real estate activities in the warehousing sector.”