Indian Economy News

The warehousing industry grew by 45% in the first nine months of FY 2022

  • IBEF
  • January 23, 2023

The Indian warehousing market has seen a growth trajectory like never before. The e-commerce platforms, manufacturing sector, Quick Serving Restaurants (QSR), and food delivery segments have risen sharply, increasing the need for warehousing spaces. According to the reports, the market grew by 45% in the first nine months of FY 2022 and may push the net absorption to around 43 million square feet by the end of 2022. 

The industry is mainly concentrated in the major ports, including the National Capital Region (NCR), Bengaluru, Chennai, and the states of Maharashtra, Gujarat, and Karnataka. 

According to the ICRA report, the overall supply warehouse space witnessed a 17% Compounded Annual Growth Annual (CAGR) from 2016 to 2021, pushing the net absorption to 258 million square feet. Additionally, an increase in grade-A warehouse supply was seen from 16% in 2016 to 45% in 2021. The demand for warehousing services is expected to grow at a CAGR of 17-18% until the end of 2022, which would be primarily driven by the growing e-commerce sector.

The industry is attracting private equity funds as well as real estate developers and now, even retail investors are interested in investing in warehouses and industrial spaces. The warehousing development attracts less investment, but its rental yield is among the highest in the commercial real estate segment. Many start-ups and tech platforms are facilitating the purchase and management of various warehouse assets across the country.

The grade-A warehousing market has grown at a steady rate in the recent past owing to the growth of e-commerce in the country and is expected to grow at a rate of 15% by 2025. India, being the fastest-growing economy, is rapidly emerging as the world’s manufacturing and logistics hub, thereby creating loads of opportunities for investors.  

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.