A new report by CREDAI and CRE Matrix forecasts robust growth in India's Grade A warehousing sector, projecting national stock to reach 300 million square feet (msf) by 2025, up from the current 216.2 msf. The surge is driven by the expanding industrial base, increasing manufacturing needs, and booming e-commerce, which requires efficient storage for nationwide order fulfilment. Rental prices for Grade A warehouses have risen by 5% in Q1 2024, with a healthy absorption-to-supply ratio indicating swift leasing and minimal vacancies. Pune and NCR lead demand, contributing 45% of Grade A space needs, with Mumbai Metropolitan Region and NCR combining for 53%. The report underscores government policies supporting the sector, including infrastructure status for logistics, GST implementation, and 100% FDI in warehousing, creating an attractive investment environment. With an anticipated 83.8 msf increase in Grade A space, India's warehousing sector promises substantial growth opportunities amidst a dynamic economic landscape.
India's economic engine is driving a surge in demand for modern storage solutions. A new report from the Confederation of Real Estate Developers Association of India (CREDAI) and CRE Matrix predicts significant growth in the Grade A warehousing sector, with a projected national stock reaching 300 million square feet (msf) by 2025. This ambitious target represents a substantial increase from the current national stock of 216.2 msf.
The report identifies several key factors propelling this growth. India's booming industrial sector, with its expanding manufacturing base, requires efficient warehousing solutions for storing and distributing goods. Additionally, the e-commerce sector is witnessing explosive growth, creating a significant demand for storage space to manage online order fulfilment across the country.
The report highlights a trend of rising rental prices for Grade A warehouses, reflecting the strong demand that continues to outpace supply. In the first quarter of 2024, rentals increased by 5%. This trend is further supported by a healthy absorption-to-supply ratio of 1.4, indicating that available space is being leased quickly, with limited vacancies remaining in the market.
The report underscores the regional concentration of warehousing activity. Pune and the National Capital Region (NCR) are leading the charge, contributing a combined 45% of the demand for Grade A and A+ warehousing space in India. Furthermore, the Mumbai Metropolitan Region (MMR) and NCR combined account for a staggering 53% of the total demand. These figures reveal a significant concentration of warehousing activity in these major economic hubs.
The report's findings paint a bright picture for the future of the Indian warehousing sector. Analysts predict continued strong demand and supply growth, fuelled by factors like e-commerce expansion, retail growth, and the influx of global companies entering the Indian market. Cities like Pune, NCR, and MMR are expected to remain at the forefront of this growth, solidifying their positions as key warehousing hubs.
The Indian government's supportive policies are also playing a crucial role in attracting investment to the warehousing sector. These policies include granting infrastructure status to the logistics sector, implementing the Goods and Services Tax (GST), and allowing 100% Foreign Direct Investment (FDI) in warehousing and storage. These initiatives create a stable and attractive environment for investors looking to participate in India's warehousing boom.
With a projected increase in Grade A warehousing space of over 83.8 million square feet by 2025, India's warehousing sector is poised for significant growth. Fuelled by a robust economy, growing e-commerce, and strategic government policies, this sector presents exciting opportunities for investors and developers alike.
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