A report released on November 12 by the Confederation of Real Estate Developers' Associations of India (CREDAI) and property consultants Anarock said that Grade-A warehousing will grow 15 percent by 2025 due to growing demand, as Grade-B and Grade-C warehouses are deemed inadequate for the needs of modern businesses.
The report said that India had become a land of opportunity for the warehousing sector, which is poised to clock revenues of $2.8 billion by 2025.
The report was released on the second day of CREDAI’s annual NATCON 2022 being held at YAS Island in Abu Dhabi.
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A total of 48.5 million square feet was leased in grade A warehouses in the top seven cities in 2021. This is expected to reach 55.8 million square feet by the end of 2023
A total of 48.5 million square feet of grade A warehouse space was leased in the top seven cities in 2021. This is expected to reach 55.8 million square feet by the end of 2023, said the report.
The total area leased for Grade-A warehousing across 7 cities stood at 160 million square feet. The western region (Mumbai and Pune) had the largest share with (37 percent), followed by the south (Bangalore, Chennai, and Hyderabad) with a 32 percent share.
Third-party logistics (3PL) firms, e-commerce companies, and manufacturing are the top three sectors that lease the maximum warehouse space across 7 cities.
Also read: Gross absorption in industrial and warehousing facilities touches 10.8 mn sq ft: Report
Sharing insights from the report, Harsh Vardhan Patodia, President, CREDAI, said, “We believe the next wave of growth for the real-estate industry will come from the Grade-A warehousing sector. It has become an attractive investment proposition for a lot of foreign and domestic players given its exponential demand."
He added, "The government’s emphasis on ease of doing business with a focus on single-window clearance in many states with respect to land allotment and environmental clearances are aiding this sector extensively. This is the reason that its demand is increasing not only in metro cities, but tier II and III cities as well.”
Warehousing as an asset class has been a preferred sector for investors and developers alike, who include this in their real estate portfolio as the production is faster and generates higher revenues with lower risks, said CREDAI in a statement.
It further added that steady policy support from the government in the past few years, including according infrastructure status to the logistics sector, GST implementation, and permitting 100 percent FDI in warehousing and storage facilities, has been crucial in attracting investments in this sector.
Also read: Industrial and warehouse leasing stays robust as third-party logistics players lead demand: Colliers
"Supply chain is the backbone of any business and economy. Hence, the government is trying to support the same by implementing large Infrastructure projects to improve connectivity, and by introducing the National Logistics Policy. Warehousing in India has attracted the attention of investors as the country is poised to upgrade its supply chain to reach its goal of becoming a $5 trillion economy,” said Shobhit Agarwal, MD & CEO, ANAROCK Capital Advisors.
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