India’s warehousing sector to cross 300 MSF mark by 2025, reveals report – Industry News

Responsible for storage facilities of goods, not only does the manufacturing and services sector but the whole economy depends upon the warehousing industry as it is counted as an integral part of import-export activities. The warehousing sector of India is set to cross the 300 million square feet (MSF) mark by 2025, according to a report jointly launched by CREDAI and CRE Matrix. This is due to the rapid industrial growth and emergence of real estate segments in the country.

Currently, the overall Grade A warehousing stock stands at 216.2 MSF. In Q1CY24, India observing a 5 per cent increase in rentals, reflecting how India’s warehousing demand continues to surpass supply with the absorption to supply ratio standing at 1.4 in the quarter. Through the nation-wide study, it was noted that Pune and NCR’s contribution to the pan-India Grade A/A+ warehousing demand was 45 per cent, while MMR and NCR jointly had a demand touching 53 per cent in the segment.

As compared to Q1CY23, MMR alone had a 52 per cent increased supply in Q1 CY24. The industries that made the most impact to achieve this growth are third party logistics with 27 per cent, manufacturing at 20 per cent and e-commerce at 12 per cent. This quarter has also seen a 1.2 per cent decline in Grade A/A+ vacancy levels of warehousing across top six cities as compared to Q1CY23.

Boman Irani, President, CREDAI, said, “The Indian real estate sector’s strong fundamentals mirror India’s economic growth, as evidenced by the exponential rise of specialized segments like warehousing. Q1CY24’s five per cent rental increase highlights the demand surge in this evolving asset class. With e-commerce, retail expansion and global companies entering India, we foresee a robust demand and supply growth for Grade A warehouses. Pune, NCR and MMR lead this transformation, with India’s favorable policies, competitive manufacturing costs and ample labor making it a prime investment destination.”

Furthermore, the various data points culled out by this report point towards how India has revamped its outlook toward the warehousing sector over the last decade to reform from unorganized godown structures to a prominent asset class.

The warehousing demand is expected to continue to grow in the future due to an increasing demand resulting from increased consumption. Unceasing policy support from the government in the last few years including infrastructure status to the logistics sector, GST implementation and permitting 100 per cent FDI in warehousing, storage has also been crucial in attracting investments in this sector, the report stated.

“We are building highways at unprecedented speed and state governments have simplified laws to set up warehousing facilities. But that takes care of supply only. On the demand side, India’s middle class income and population is booming at a faster pace than China and is central to our goal of becoming $5 trillion in the next three years. Today, India’s warehousing stock is 1/5th of China and this booming Indian middle class needs more storage space than ever before,” Abhishek Kiran Gupta, CEO and Co-Founder, CRE Matrix and IndexTap, added.