New Delhi : Vestian, an occupier-focused workplace solutions firm, in association with the Federation of Indian Chambers of Commerce and Industry (FICCI), has released a report titled “Warehousing & Logistics Sector in India: A Brief Analysis.” The report highlights the remarkable growth of the warehousing and logistics sector in India in recent years. It further evaluates the various market trends and the key policies defining the industry and the developments that are anticipated in the forthcoming period.
India’s warehousing and logistics sector has undergone an extraordinary growth in recent years. This growth has been fuelled by many factors but some of the notable ones being the rapid expansion of e-commerce, the rise of organized retail and the concerted effort towards to the manufacturing sector. The report highlights specifically that 2022 saw a continued yet relatively slow growth in the warehousing and logistics sector primarily due to the potential impact of the global recession and the lower velocity of e-commerce demand as the pandemic situation improved. The sector witnessed a total absorption of 31.2 million sqft recorded across the seven key cities of the country – Mumbai, NCR, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata. The overall absorption growth almost matched the pre pandemic absorption in 2019 thereby signifying the sectors fast paced recovery despite a slowing economic environment.
It would also be relevant to know that NCR accounted for the highest volume of leased deals in warehousing and logistics space during 2022, with Mumbai and Pune following closely. On the occupier front for 2022, 3PL players accounted for the majority share of 45% in the total absorption in, with the manufacturing segment accounting for 15.5% of the total absorption. Such absorption has been possible due to the government policy towards enabling India to achieve global competitiveness.
The report further also indicates that with increasing maturity the tenants have begun to raise their demands resulting in enhanced offerings and consequently higher rentals with a further expected increase in the forthcoming period In 2022, the weighted average rentals were noted to be at around at INR 22/sqft per month.
Shrinivas Rao, CEO of Vestian, said, “India’s warehousing and logistics sector has not only shown remarkable resilience in the face of challenging economic headwinds but in fact the consistent growth in the sector’s absorption of warehousing space and the increasing institutional investment in this asset class in the past few years indicates the strong confidence of stakeholders and investors in the industry’s long-term growth prospects. The sector will continue its upward trajectory in the forthcoming period, driven by the e-commerce boom, shift of unorganized to organized retail and strong policy making by the government across sectors, notably the manufacturing sector. Furthermore, the warehousing and logistics sector has garnered a total institutional investment of USD 5.4 billion in the past four years (2019-2022), of which a significant 35% share was attributed to 2022 alone. The share of warehousing investment in 2021 and 2022 accounted for the second-highest share of institutional investment in real estate, surpassing other asset classes such as residential and retail.”
Raj Menda, Joint Chairman FICCI Real Estate Committee and Corporate Chairman RMZ Corp said, “Vestian’s partnership with FICCI in preparing this report on the warehousing and logistics sector in India is a testament to the industry’s collaborative approach towards growth and development. This report provides valuable insights into the industry’s key trends and policies and will be instrumental in guiding future investment decisions. The government’s focus on the manufacturing sector and the rise of e-commerce and organized retail have created a significant demand for warehousing space. The industry has responded well to this demand, and we are confident it will continue evolving and innovating to meet the market’s changing needs.”
Information and analysis on the warehousing investments from 2019 to 2022 shows that the majority share of the investment; almost 52%, was distributed across multiple cities in the country, depicting investors’ decision to diversify their portfolio instead of focusing on one region alone. It also showed the investors’ growing confidence in the Tier II cities of the country.
This report presents a positive outlook for India’s warehousing and logistics sector, with investors and stakeholders showing an increasing interest in the industry from a medium-term point of view. The report provides valuable insights into the trends and developments expected to shape the industry’s future.