India’s warehousing sector is poised to exceed 300 million square feet by 2025, driven by robust industrial demand and favorable government policies, according to a joint report by CREDAI and CRE Matrix.
Current Landscape and Growth Trends
Currently, India boasts a Grade A warehousing stock of 216.2 million square feet (msf), with projections indicating significant growth. The sector’s expansion is fueled by the rise in e-commerce, retail sector expansion, and increased investments from global companies entering India.
Factors Driving Demand
The warehousing sector has experienced a persistent demand-supply imbalance, highlighted by an absorption-to-supply ratio of 1.4 in recent quarters. This underscores the necessity for modern Grade A facilities capable of meeting evolving logistical demands. Rentals have also risen by 5% in the first quarter of 2024, signaling strong investor interest in the sector.
Key Contributors to Demand
Third-party logistics (3PL) providers account for 27% of the overall demand, with significant contributions also coming from the manufacturing and e-commerce sectors, constituting 20% and 12% of the demand, respectively. Pune and the National Capital Region (NCR) jointly command a substantial 45% share in Grade A/A+ warehousing requirements.
Regional Insights and Sectoral Performance
During the first quarter of 2024, the Mumbai Metropolitan Region (MMR) witnessed a remarkable 52% increase in warehousing supply compared to the same period last year, underscoring its growing importance as a logistics hub. This regional diversity reflects India’s decentralized approach to warehousing, catering to diverse market needs.
Government Support and Policy Impetus
Government initiatives have played a pivotal role in driving growth, including granting infrastructure status to the logistics sector and the implementation of the Goods and Services Tax (GST). These measures have streamlined operations, reduced costs, and bolstered investor confidence. The policy allowing 100% Foreign Direct Investment (FDI) in warehousing and storage has further attracted significant global investment, reinforcing India’s position as a preferred investment destination.
Future Projections and Strategic Outlook
Looking forward, the sector aims to achieve Grade A completions totaling 85 msf by the end of 2025. This ambitious target reflects the sector’s growth trajectory and its pivotal role in supporting India’s economic expansion.
Conclusion
India’s warehousing sector is on a trajectory of significant growth, driven by robust demand across various sectors and supported by proactive government policies. With strategic expansions and robust investor confidence, India is poised to emerge as a global leader in Grade A warehousing infrastructure by 2025.