Find out how the net absorption in the Indian warehousing market is expected to touch 42.5 mn sq ft by end of 2022.
Insight
22 August 2022
Indian Warehousing Market: Present and Future
Your browser doesn't support speech synthesis.
Listen to article •
Read time: 1 sec
Insights into the trends of India’s warehousing sector: The sector has shown robust recovery from the pandemic in 2021 and significant growth in H1 2022
India’s warehousing sector has checked into the fast lane in H1 2022 after showing steady recovery from COVID-19 pandemic in 2021 and has garnered traction from global and domestic institutional investors.
In 2021, India witnessed a 21% y-o-y growth in Grade A & B warehousing stock in top eight cities with the overall stock at 287 mn sq ft at the end-2021. The stock has further increased to 307 mn sq ft in H1 2022. With the increasing demand for quality warehousing space in India, there is a significant dip in the Grade A vacancy to reach 7.7% in H1 2022 and pushed the rent index from 126 in 2021 to 129 in H1 2022.
Over the years, the warehousing industry in India has evolved from storage space to highly sophisticated warehousing and logistics systems. This transformation has resulted in the increase in average size of Grade A warehouse by 2x and volume by 3x in India.
In addition to the increase in quality warehouse spaces, this report provides insights into some of the notable movements happening in the Indian warehousing market:
- Increase in global investors in India’s evolving logistics and industrial sector. These investments are not restricted to Tier 1 cities, they are also spreading across Tier 2 and 3 cities which are now emerging as major consumption and e-commerce hubs.
- The rise in large Grade A warehousing facilities with advancement of technology and automation
- Increasing focus on urban logistics sector as the market is shifting towards on-demand solutions with rapid deliveries to end users
- Omni-channel retailing to merge a traditional warehouse and a retail store into a fulfilment center through optimizing inventory management, operating, and real estate costs.
Moreover, there are some noteworthy trends explored in the report that are shaping the future of India’s logistics and industrial sector:
- Private-equity investors pushing the warehousing rents in India as they expect an entry yield of 9% - 10% instead of the current yield of around 7% - 7.5%.
- ESG has become a priority for industrial and logistics real estate developers as the projects that meet ESG standards are experiencing easier planning process, tenant retention and investor trust.
- Transformation in India cold chain industry considering the growth in FMCG, pharmaceutical and organized retail sectors during the pandemic
- Potential of the Indian warehousing market to shift towards the multi-storey warehousing which can facilitate maximum land utilization in cities having limited land supply and high land costs.