Home / Industry / Infrastructure /  To meet India’s warehousing demand, $3.8 bn required in funding over next 3 years: Report

To meet India’s warehousing demand, $3.8 bn required in funding over next 3 years: Report

The absorption of grade A warehousing increased from 34 million sq. ft in 2018 to 48.5 million sq. ft in 2021 at a CAGR of 12.6%. (File Photo: Mint)Premium
The absorption of grade A warehousing increased from 34 million sq. ft in 2018 to 48.5 million sq. ft in 2021 at a CAGR of 12.6%. (File Photo: Mint)

Warehousing has emerged as one of the most preferred asset classes for investors and developers to balance their real estate portfolios. The warehousing segment is range bound and a high revenue generator.

NEW DELHI: India will need to create adequate supply to meet an estimated 223 million sq ft of grade A warehousing demand over the next three years, which in turn would require an estimated $3.8 billion in funding, as per the CREDAI-ANAROCK report ‘India Warehousing - A Sunrise Sector’.

According to the report, “The absorption of grade A warehousing increased from 34 million sq. ft in 2018 to 48.5 million sq. ft in 2021 at a CAGR of 12.6%...Meanwhile, supply in this category rose from 37.8 Mn sq. ft to 51 million sq. ft in the same period at a CAGR of 10.6%."

Shobhit Agarwal, MD & CEO - ANAROCK Capital said, “Based on the data, the sector currently has ‘dry powder’ funding of $900 million from existing commitments. This signifies a latent investment opportunity of further $2.8 billion in the warehousing sector in the near future. Much of this funding will need to target grade A warehousing facilities, which are witnessing increasing demand due to direct and indirect beneficial impacts on overall operational efficiencies."

Harsh Vardhan Patodia, President - CREDAI & CMD - Unimark Group, said, “Warehousing has emerged as one of the most preferred asset classes for investors and developers to balance their real estate portfolios. The warehousing segment is range bound and a high revenue generator. While the IRR is higher, the risk is lower, and production is faster. Moreover, this sector is consumption-led, unlike other sectors which a primarily developer-led."

Among India’s top seven cities, Mumbai Metropolitan Region has the highest average rent at 27/sq. ft., and Hyderabad lowest at 20/sq.ft. Of top 10 micro markets, the western markets of Bhiwandi, Chakan and Panvel/Taloja dominate grade A warehousing space leasing share with 41%.

The top three sectors - 3PL, e-commerce, and manufacturing and automotive account for a 78% share of warehouse leasing space across 7 cities. 3PL has the highest leasing space share at 42%, given the upsurge in companies deploying their supply chain and logistics function to 3PL players.

According to the report, the top seven Indian cities reported about 160+ Mn sq. ft of grade A warehouse leasing and was highest in the western markets of MMR and Pune, followed by the primarysSouthern markets of Bengaluru, Chennai and Hyderabad, which together saw 32% of overall leasing volumes.

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