Indian Warehouse Leasing Rises in 2024 With 8% YOY Growth

Warehouse leasing in India saw an 8% year-on-year growth during H1 2024. With key cities like Mumbai and Pune leading the absorption rates, the sector has experienced both growth and challenges.

Ghar shares 6 pointers to understand the trends in Indian warehouse leasing in 2024:

1. Increased Absorption of Warehouse Space

Indian warehouse space absorption reached 16.6 million sq. ft. during H1 2024, marking an 8% rise compared to H1 2023. However, absorption dropped by 26% when compared to H2 2023, largely due to a sharp 74% decline in the National Capital Region (NCR).

2. Mumbai and Pune Dominate the Market

The Mumbai and Pune regions accounted for 63% of the total absorption in H1 2024. Mumbai’s share alone increased from 25% in H1 2023 to 41% in H1 2024. The demand for grade-A warehouses in locations like Bhiwandi, Panvel, Uran, Taloja, and Ambernath contributed to this growth. In contrast, NCR saw a major decline in its share from 31% to 6% during the same period.

3. Southern Cities Show Steady Growth

Southern cities, including Bengaluru, Chennai, and Hyderabad, contributed to 29% of the total warehouse space absorption. Chennai, in particular, reported a 1.5 million sq. ft. absorption in H1 2024, which is an impressive 191% increase over H1 2023, driven by the low base effect.

4. 3PL and Manufacturing Sectors Drive Demand

Third-Party Logistics (3PL) accounted for 39% of the total warehouse leasing in H1 2024, up from 26% in H1 2023. Other industries like Engineering & Manufacturing and Automobiles & Auto Components also saw an uptick in demand, with their shares increasing from 16% and 4% in H1 2023 to 22% and 9%, respectively, in H1 2024.

5. Record Investments in the Sector

The Indian warehousing sector attracted investments worth USD 1.6 billion in H1 2024, making up 42% of the total institutional investment in the real estate sector. This marks a significant increase as investments in H1 2024 were equal to one-third of the total investments received over the last four years. Moreover, investment levels increased by 4.5 times compared to H1 2023, fueled by global economic recovery and greater participation by foreign investors.

6. Boost in Infrastructure Development and Logistics Efficiency

Continued infrastructure development is expected to reduce logistics costs from 8-9% of GDP to 5-6%. This cost reduction is likely to stimulate further real estate activity in the warehousing sector, supporting long-term growth.

Key Info:

• H1 2024 Absorption: 16.6 million sq. ft. (+8% year-on-year)
• NCR Decline: 74% drop in absorption
• Mumbai & Pune Share: 63% of total absorption
• Southern Cities Share: 29% of total absorption
• Chennai Absorption Increase: 191% over H1 2023
• 3PL Share: 39% (+13% year-on-year)
• Investment in Warehousing: USD 1.6 billion (42% of total real estate investments)
• Investment Growth: 4.5X compared to H1 2023
• Logistics Cost Reduction Target: 8-9% to 5-6% of GDP