Demand for warehouses in India reached record high in 2022-23: Report
- IBEF
- June 14, 2023
According to Knight Frank's India Warehousing Market Report 2023, the demand for warehouses in India's top eight cities reached a record high of 51.3 million square feet (MSF) in 2022-23. In Mumbai, Bengaluru, and Kolkata, demand was at an all-time high. In India, demand increased by 24% as compared with FY22.
According to the report, the demand was primarily driven by an increase in activity from the third-party logistics (3PL), manufacturing, and retail sectors. The 3PL sector showed the biggest increase in demand, up 34% from the previous year. The manufacturing industry saw a 23% year-on-year (YoY) increase in demand. However, the e-commerce sector experienced a fall in demand in FY23, owing mostly to early capacity expansion in recent years and a gradual trend towards flexibility.
India has benefited from China's ongoing trend of decentralising manufacturing capacity. The most recent shift was made by Apple, which currently manufactures 7% of its iPhones in India, up from 1% in 2021.
"In addition, the government's emphasis on 'Make in India' and the production-linked incentive (PLI) scheme have begun to pay dividends and continue to boost the prospects of the country's manufacturing industries," the report added.
While Mumbai and the national capital region (NCR) dominated the market in terms of overall transaction volumes in FY23, Bengaluru and Kolkata saw the biggest growth in annual transacted volumes, at 25% and 18% YoY, respectively.
According to the report, inflation in the cement and steel sectors has driven rents higher, and they will continue to rise in FY23.In FY23, the top eight cities in India had a 3-8% increase in warehouse rent, with Bengaluru leading the way (8%). It was followed by 7% in the National Capital Region (NCR) and 5% in Ahmedabad.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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