H1 2024 Warehouse Absorption Sees 8% YoY Increase

In H1 2024, the warehousing sector absorbed 16.6 million sq. ft., marking an 8% increase from the same period in the previous year but a 26% decline from H2 2023. This reduction is primarily due to a significant 74% drop in absorption in NCR.

Mumbai and Pune combined accounted for 63% of the total absorption, with southern cities (Bengaluru, Chennai, and Hyderabad) contributing 29%. Mumbai's share rose from 25% in H1 2023 to 41% in H1 2024, driven by increased demand for grade-A warehouses in areas like Bhiwandi, Panvel, Uran, Taloja, and Ambernath. NCR's share fell sharply from 31% to 6%. Chennai saw a 191% rise in absorption to 1.5 million sq. ft. due to the low base effect.

3PL (Third-Party Logistics) companies dominated the sector, holding a 39% share in H1 2024, up from 26% in H1 2023. The Engineering & Manufacturing and Automobiles & Auto Components sectors also increased their shares from 16% and 4% in H1 2023 to 22% and 9% in H1 2024, respectively.

The sector received USD 1.6 billion in investments in H1 2024, making up 42% of the total institutional investment in the real estate sector. With major global economies expanding and foreign investor participation growing in the Indian warehousing sector, investments in H1 2024 equaled one-third of the total institutional investment received in the past four years, increasing by 4.5 times compared to H1 2023.

Shrinivas Rao, FRICS, CEO of Vestian, stated, "With the increased participation of foreign investors, funds have become more accessible. Additionally, recent government announcements aimed at boosting infrastructure developments are expected to reduce logistics costs from 8-9% to 5-6% of GDP, leading to increased real estate activities in the warehousing sector."