India’s Grade A warehousing sector is likely to grow significantly and is set to cross 300 million square feet (msf) by 2025, according to a report by the Confederation of Real Estate Developers Association of India (CREDAI) and CRE Matrix.
The report highlights that rapid industrial growth can be attributed as one of the driving forces behind the robust growth of the warehousing sector. The overall Grade A warehousing stock in the country stands at 216.2 msf.
In the first quarter of calendar year 2024, India recorded a 5 percent rise in rentals, reflecting how India’s warehousing demand continues to surpass supply, with the absorption-to-supply ratio standing at 1.4 in the quarter.
The CREDAI-CRE Matrix report stated that the contribution from Pune and the National Capital Region (NCR) to the pan-India Grade A and A+ warehousing demand was 45 percent, while the Mumbai Metropolitan Region (MMR) and NCR jointly had a demand touching 53 percent in the warehousing segment.
As compared to Q1 CY23, MMR alone had a 52 percent increased supply in Q1 CY 24, while the new supply in Bengaluru grew 110 percent during the same period.
Various industries that contributed the most to the growth of warehousing sector are third party logistics (27 percent), manufacturing (20 percent), and e-commerce (12 percent).
Boman Irani, president of CREDAI, said that the Indian real estate sector's strong fundamentals mirror the country’s economic growth, as is seen by the exponential rise of specialised segments like warehousing.
“The 5 percent rental increase in Q1 CY24 highlights the demand surge in this evolving asset class. With e-commerce, retail expansion, and global companies entering India, we foresee a robust demand and supply growth for Grade A warehouses. Pune, NCR, and MMR lead this transformation, with India's favourable policies, competitive manufacturing costs, and ample labour making it a prime investment destination,” Irani said.
Policy support from the government in the last few years, including infrastructure status to the logistics sector, GST implementation, and permitting 100 percent FDI in warehousing and storage, has also been crucial in attracting investments in this sector, he said.
Abhishek Kiran Gupta, CEO and co-founder of CRE Matrix and IndexTap said that India’s middle class income and population is booming faster than China and is central to the country’s goal of becoming a $5-trillion economy in the next three years.
“That’s why we believe India’s consumption story has just begun. Today India’s warehousing stock is 1/5th of China's and this booming Indian middle class needs more storage space than ever before. We are on the right track to achieve Grade A completions of 85 msf in the next seven quarters to end 2025 with a 300 msf Grade-A stock milestone,” Gupta said.
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