India will need to create adequate supply to meet an absorption of approx. 223 mn sq ft of Grade A warehousing demand over the next 3 years and an equity investment of around $3.8 bn will be required to support this scale of development, finds the CREDAI-ANAROCK report ‘India Warehousing – A Sunrise Sector’.

The report was released at NATCON 2022 held in Abu Dhabi from 11 to 13 November, 2022.

Commenting on the same, Shobhit Agarwal, MD & CEO, ANAROCK Capital, said, “Based on the data, the sector currently has ‘dry powder’ funding of $900 mn from existing commitments. This signifies a latent investment opportunity of further $2.8 bn in the warehousing sector in the near future. Much of this funding will need to target Grade A warehousing facilities, which is witnessing increasing demand due to its direct and indirect beneficial impacts on overall operational efficiencies.”

The absorption of Grade A warehousing increased from 34 Mn sq. ft in 2018 to 48.5 Mn sq. ft in 2021 at a CAGR of 12.6%, states the report. Meanwhile, supply in this category rose from 37.8 Mn sq. ft to 51 Mn sq. ft in the same period at a CAGR of 10.6%.

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The top 7 Indian cities witnessed approx. 160+ Mn sq. ft of Grade A warehouse leasing and was highest in the Western markets of MMR and Pune, followed by the primary Southern markets of Bangalore, Chennai and Hyderabad, which together saw 32% of the overall leasing volumes.

Harsh Vardhan Patodia, President – CREDAI & CMD – Unimark Group, said, “Warehousing has emerged as one of the most preferred asset classes for investors and developers to balance their real estate portfolios. The warehousing segment is range bound and a high revenue generator. While the IRR is higher, the risk is lower, and production is faster. Moreover, this sector is consumption-led, unlike other sectors which are primarily developer-led.”

Current RENTALS ACROSS Top 7 CITIES

Sectors Driving Warehousing Demand

The top 3 sectors – 3PL, E-commerce, and Manufacturing and Automotive – account for a 78% share of warehouse leasing space across 7 cities. 3PL has the highest leasing space share at 42%, given the upsurge in companies deploying their supply chain and logistics function to 3PL players.