Indian warehousing faces stiff challenge due to surging land prices

12 Mar 2022 CW Team

Increasing land prices and unavailability of suitable land parcels with good connectivity are creating stiff challenges to the Indian warehousing and logistics sector.

The increasing competition for a suitable land parcel with different state-specific land laws is increasing complexities for institutional funds and warehouse developers.

CEO of LOGOS India, Mehul Shah, said that any new institutional entrant would result in a 1% increase in the existing good land. So, if there are three more players, the prices will rise by 3%.

The yields in warehousing assets have dropped to 7.5% from 8.5% in the last two years, as more global players are investing in such assets amid the Covid-19 pandemic.

The Indian warehousing sector has been witnessing increasing interest from institutional investors, with over $5 billion funds committed by private equities and pension funds such as Canada Pension Plan Investment Board (CPPIB), Warburg Pincus and Ivanhoe Cambridge over the past five years.

The demand for the warehousing and logistics sector has stood out in the past few quarters, with an expansion of e-commerce and growth of third-party logistics.

India's Grade-A average rental of $36 per sq m per annum or Rs 21 per sq ft per month is 50-55% lower than the Asia Pacific region's average of $75-80 per sq m per annum.

The warehousing and logistics of the real estate sector, facing challenges due to the Covid-19, is expected to gain momentum and attract more investment in 2022.

The transactions in the warehousing sector are estimated to increase at a compound annual growth rate (CAGR) of 20%, from 31.7 million sq ft in 2020-21 to 45.9 million sq ft in 2022-23.

According to Jones Lang LaSalle (JLL) India, the share of e-commerce entities in transaction volume is projected to increase to 36% from 31% during this period.

Image Source

Also read: Make-in-India scheme holds massive potential in warehousing

Increasing land prices and unavailability of suitable land parcels with good connectivity are creating stiff challenges to the Indian warehousing and logistics sector. The increasing competition for a suitable land parcel with different state-specific land laws is increasing complexities for institutional funds and warehouse developers. CEO of LOGOS India, Mehul Shah, said that any new institutional entrant would result in a 1% increase in the existing good land. So, if there are three more players, the prices will rise by 3%. The yields in warehousing assets have dropped to 7.5% from 8.5% in the last two years, as more global players are investing in such assets amid the Covid-19 pandemic. The Indian warehousing sector has been witnessing increasing interest from institutional investors, with over $5 billion funds committed by private equities and pension funds such as Canada Pension Plan Investment Board (CPPIB), Warburg Pincus and Ivanhoe Cambridge over the past five years. The demand for the warehousing and logistics sector has stood out in the past few quarters, with an expansion of e-commerce and growth of third-party logistics. India's Grade-A average rental of $36 per sq m per annum or Rs 21 per sq ft per month is 50-55% lower than the Asia Pacific region's average of $75-80 per sq m per annum. The warehousing and logistics of the real estate sector, facing challenges due to the Covid-19, is expected to gain momentum and attract more investment in 2022. The transactions in the warehousing sector are estimated to increase at a compound annual growth rate (CAGR) of 20%, from 31.7 million sq ft in 2020-21 to 45.9 million sq ft in 2022-23. According to Jones Lang LaSalle (JLL) India, the share of e-commerce entities in transaction volume is projected to increase to 36% from 31% during this period. Image Source Also read: Make-in-India scheme holds massive potential in warehousing

Real Estate

05 Aug 2026

CREDAI-MCHI to Host 10th Design & Construction Conference

CREDAI-MCHI will host the 10th anniversary edition of its Design & Construction Conference on August 19, 2026, at the Jio World Convention Centre in Mumbai.The event is expected to bring together more than 500 procurement leaders, construction heads, architects, consultants and senior real estate decision-makers, alongside over 50 construction and ancillary brands.The conference will feature product launches, technology showcases, knowledge sessions, strategic business-to-business networking and recognition of procurement professionals contributing to the transformation of the construction..

Infrastructure Energy

05 Aug 2026

BorgWarner Wins Extension for High-Voltage Inverter Programmes

BorgWarner has secured a major extension of several high-volume high-voltage inverter programmes from a leading European automotive manufacturer.The contracts cover updated inverter designs for plug-in hybrid and 800V battery-electric vehicle applications. Production is scheduled to begin in 2029.Isabelle McKenzie, President and General Manager, BorgWarner PowerDrive Systems, said the programme extensions demonstrate the company’s position in power electronics and reflect the strength of its technology, in-house expertise and customer relationships.For plug-in hybrid vehicles, BorgWarner wil..

Infrastructure Urban

05 Aug 2026

Castrol India Q2 Profit Rises 43% to Rs 3.48 bn

Castrol India reported a 43 per cent year-on-year increase in profit after tax to Rs 3.48 billion for the quarter ended June 30, 2026, supported by growth across its consumer, industrial and institutional businesses.Revenue from operations increased 25 per cent to Rs 18.71 billion during the second quarter of 2026, compared with Rs 14.97 billion in the corresponding period of 2025. EBITDA rose 41 per cent to Rs 4.94 billion from Rs 3.50 billion.Sequentially, revenue increased from Rs 15.45 billion in the first quarter of 2026, while EBITDA rose from Rs 3.29 billion. Profit after tax increased ..