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India’s Grade A Warehousing Sector to Cross 300 MSF by 2025: CREDAI-CRE

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India’s Grade A Warehousing Sector to Cross 300 MSF by 2025: CREDAI-CRE

India’s warehouse sector is expected to surpass 300 million square feet (MSF) by 2025, driven by fast industrial growth and a thriving real estate segment, per a report by CREDAI and CRE Matrix. The Grade A warehouse stock is currently 216.2 MSF.

With an absorption to supply ratio of 1.4, India’s warehouse rentals increased by 5% in Q1 2024, indicating continued demand over supply. According to the report, MMR and NCR combined accounted for 53% of the country’s demand for Grade A/A+ warehousing, while Pune and NCR together provided 45%. Notably, supply of MMR alone increased by 52% from Q1 2023.

The three sectors that contributed most to this expansion were manufacturing (20%), e-commerce (12%), and third-party logistics (27%). In addition, compared to Q1 CY’23, there has been a 1.2% decrease in Grade A/A+ vacancy levels of warehousing across the top 6 cities this quarter.

The report’s numerous data points demonstrate how India has changed its perspective on the warehousing industry over the past ten years, transitioning from disorganised godown structures to a significant asset class. India is a desirable place to invest because of its strong development potential, improved inflation forecast, government emphasis on policy implementation, cheaper manufacturing prices, and labour availability compared to wealthy nations.

“The Indian Real Estate sector’s strong fundamentals mirror India’s economic growth, as evidenced by the exponential rise of specialised segments like warehousing,” Mr. Boman Irani, President of CREDAI, shared his thoughts from the research. The 5% rental rise in Q1 CY ’24 demonstrates the spike in demand for this changing asset class. We anticipate strong demand and supply growth for Grade A warehouses due to the rise of e-commerce, the expansion of retail, and the entry of foreign enterprises into India. India is a top investment destination due to its beneficial regulations, affordable manufacturing prices, and large labour pool. Pune, NCR, and MMR are at the forefront of this shift.

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Many developers and investors have chosen warehousing as an asset class to diversify their real estate holdings because it produces goods more quickly and at a lower risk. As a result, it is anticipated that the need for warehousing would only grow in the future due to rising consumption. The government’s unwavering policy support in recent years, which has included granting infrastructure status to the logistics industry, implementing the GST, and allowing 100% FDI in warehousing and storage, has also been essential in luring investments into this sector.

According to Abhishek Kiran Gupta, CEO and Co-Founder of CRE Matrix and IndexTap, “state governments have simplified laws to set up warehousing facilities, and we are building highways at an unprecedented speed.” However, that just addresses Supply. Demand-wise, India’s population and middle class income are growing more quickly than those of China, which is crucial to our objective of reaching $5 trillion in the next three years. For this reason, we think the tale of India’s consumerism is far from over. India’s warehousing stock is currently one-fifth that of China, and the country’s expanding middle class requires more room for storage than ever before. We are on schedule to finish 2025 with a 300 msf grade A Stock milestone and attain Grade A completions of 85 msf in the upcoming seven quarters.

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