CREDAI report reveals Indian Grade A warehousing to surpass 300 mn sqft by FY25

The report, a collaboration between CREDAI and CRE Matrix, predicts that the warehousing industry will surpass the 300 million square feet milestone by the year 2025. Currently, the overall Grade A warehousing stock in the country stands at 216.2 million square feet (msf).

CREDAI president Boman Irani, stated,“With e-commerce, retail expansion and global companies entering India, we foresee a robust demand and supply growth for Grade A warehouses."

He also added that, India's favourable policies, competitive manufacturing costs and labor availability make it a prime investment destination. 

Throughout the initial quarter of the current calendar year, the demand for real estate properties exceeded the available supply, resulting in an absorption to supply ratio of 1.4. Additionally, there was a 5% rise in rental prices. At the same time, Grade A/A+ vacancy rates in the top-6 cities decreased by 1.2% compared to the previous year, as stated in the report.

Irani highlighted,“Q1 CY 2024’s 5% rental increase highlights the demand surge in this evolving asset class.”

Third party logistics providers held a 27% portion of the total demand in the March quarter, with manufacturing and e-commerce following closely at 20% and 12%, respectively.

During the specified period, Pune and the National Capital Region (NCR) collectively represented 45% of the demand for Grade A/A+ warehousing, in terms of geographical distribution. On the other hand, the Mumbai Metropolitan Region (MMR) and NCR combined accounted for a significant 53% of the demand in this particular segment.

The report pointed out that there was a 52% increase in supply of MMR during the first quarter of 2024, in comparison to the same period in the previous year.

The report highlights that warehousing in India is a favored asset class for investors and developers due to its ability to facilitate faster production, generate higher revenue, and pose lower risks. Moreover, government policy support such as granting infrastructure status to the logistics sector, implementing GST, and allowing 100% FDI in warehousing and storage, has played a significant role in attracting investments in this industry, as stated in the report.