Indian Grade-A warehousing soars in H1 2023

The Indian Grade-A warehousing sector has witnessed remarkable growth, surpassing 163 million square feet in the first half of 2023, driven by rapid industrial expansion and a thriving real estate segment. A joint report by CREDAI and CRE Matrix reveals that this dynamic sector experienced a demand surge, outpacing supply by 1.4 times. In absolute figures, H1 Grade A warehousing demand reached 13 million square feet, while supply stood at 9.4 million square feet, underscoring robust industry fundamentals and the expansion of specialised sectors. The report also highlights a national vacancy rate of just 8.8% at the end of H1 2023, down from 10.5% the previous year. This nationwide study, examining key markets such as Delhi-NCR, MMR, Pune, Bangalore, Chennai, and Hyderabad, reveals that MMR and NCR contributed over 49% of the new warehousing stock in H1 2023, while nearly 54% of sectoral demand came from organisations in MMR and Pune. Rental costs have surged by 10% across India, with Delhi NCR and Chennai experiencing the most significant increases (almost 20% and 20.8%, respectively) by the end of H1 2023. Leading industries leasing warehousing spaces include players in E-commerce, Third Party Logistics, and Retail, among others. Boman Irani, President of CREDAI, underscores the strength of Indian Real Estate fundamentals, driven by macro and microeconomic growth. He predicts a continued upward trajectory in Grade A warehousing demand and supply, thanks to the growth of E-commerce, Retail, and the influx of global companies into India. Abhishek Gupta, CEO of CRE Matrix, notes that warehousing remains the only real estate segment where demand has consistently exceeded supply for the past seven years. With vacancy rates at an all-time low and rentals at an all-time high, Gupta anticipates a significant increase in Grade A warehousing stock in India, possibly reaching 500 million square feet over the next five years. Average rentals have risen from INR 20 per square foot to INR 28 per square foot in 2023, and the trend toward in-city warehouses for faster delivery may even see rentals surpass office rentals in some cases.