Developers are rushing to meet soaring demand for warehouse space in India, driven by economic growth and supply chain diversification away from China. Projects like the Greenbase industrial park, backed by Blackstone, are expanding to accommodate companies shifting base from China. With India's infrastructure improvements and favorable market conditions, developers like Panattoni and Prologis are investing heavily. However, land acquisition complexities pose challenges, with surging prices and ownership disputes delaying projects. Despite hurdles, India's warehouse leasing market is thriving, attracting global players and signaling a significant shift in the country's industrial landscape.
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In southern India's industrial parks, developers are racing to meet escalating demand for warehouse and factory space as companies pivot towards India amid a global supply chain shift away from China. Notably, the Greenbase Industrial Park, backed by Blackstone and real estate magnate Niranjan Hiranandani, has emerged as a prime destination for European and American firms seeking to establish or expand operations in India. With inquiries surging, Greenbase plans to invest USD 800 million to quadruple its space, reflecting the broader trend of heightened interest in leased warehouse space.
This rush for warehouse space coincides with India's robust economic growth, surpassing 8%, and its position as an attractive alternative to China for manufacturing and export-oriented industries. As tensions escalate between China and the United States, many companies seek to diversify their manufacturing bases, with India emerging as a favorable destination. Furthermore, India's booming e-commerce and manufacturing sectors present the country as a pivotal hub for both domestic consumption and exports to global markets, leveraging its population of 1.4 billion.
Global warehouse developers like Panattoni and Prologis are seizing the opportunity presented by India's growth trajectory. Panattoni, in particular, is investing in new warehouse complexes near New Delhi, leveraging the country's expanding infrastructure, including ports and highways. Despite India's vast potential, the current leased warehouse space in the country is a fraction of that in China, indicating substantial room for growth.
The shortage of Grade A warehouses, equipped with advanced storage systems, underscores the gap between India and its counterparts like China and the United States. This deficiency presents an opportunity for developers to capitalize on the growing demand for modern warehouse facilities.
Notably, the demand for warehouse space in India's top cities has surged, with significant growth observed in Chennai, particularly near the Greenbase industrial park. Companies across various sectors, including automobile, engineering, retail, and e-commerce, are driving this growth trajectory, further fueling the demand for warehouse space.
Despite the potential for growth, developers face challenges, particularly in land acquisition. India's rapid infrastructure development has led to high demand for land, resulting in escalating prices and complex ownership structures. Developers must navigate these challenges, which can significantly delay project timelines and impact profitability.
Investcorp, adopting a different strategy, focuses on smaller warehouses, aiming to raise funds for up to eight warehouses in India. This approach reflects the diverse investment landscape within India's warehousing sector, catering to various market segments and requirements.
In conclusion, India's emergence as a preferred destination for warehouse development underscores the country's growing significance in the global supply chain landscape. As companies increasingly look beyond China, developers are poised to capitalize on India's economic boom and favorable business environment. Despite challenges in land acquisition, the outlook for India's warehousing sector remains promising, driven by robust demand and supportive government policies.
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