The warehousing market in India grew 62% year-on-year (YoY) in eight major cities of the country taking the total space covered to 51.3 million sq ft, according to a report by property firm Knight Frank.
The sector, which has been gained by the pandemic-induced online shopping boom, has seen fund flow to the tune of $1.2 billion in 2022 through June, against the $1.3 billion raised in all of 2021.
“The high growth rate of organised warehousing sector in India is a result of its rising GDP and consumerism. With warehouse leasing in India surpassing the pre-pandemic level, the sector is poised to take a quantum leap to match its more mature peers around the world," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
A survey of the sector in the top 13 secondary markets - including cities like Guwahati, Lucknow, Jaipur and Coimbatore - revealed a 31% YoY increase in transaction volumes taking the total area covered to 12.6 million sq ft in FY22 from 9.7 million sq ft in FY21.
The National Capital Region (NCR), followed by Mumbai, is leading the market with the highest overall transaction volumes, while Pune and Hyderabad exhibited maximum percentage growth in annual transacted volumes at 166% and 128% YoY respectively.
A closer look at the growth numbers revealed that almost all segments within the sector have contributed to the prosperity of the warehousing market.
Third-Party Logistics (3PL) accounted for 31% of all transactions registering a 50% YoY increase, followed by the 'other manufacturing' segment which includes automobile, pharmaceutical, etc and e-commerce which grew by 92% and 17% YoY respectively.
With active recovery post the Covid-19 pandemic, the retail segment demonstrated the highest growth with more than a three-fold rise YoY in space transacted at 5.6 million sq ft in FY22.
Alongside growing occupier demand, the sector also witnessed growth in rent figures signalling good news for developers and growing market strength.
The report also highlighted a 16% vacancy in the total warehousing space across the top eight cities of NCR, Mumbai, Pune, Bengaluru, Hyderabad, Ahmedabad, Chennai and Kolkata.