Warehousing Investment Surges 3-fold to USD 2 Billion: Vestian Report

New Delhi, Mar 20 (PTI) Institutional investment in warehousing assets jumped three-fold to nearly USD 2 billion last year on high demand from e-commerce and third-party logistics firms, according to Vestian.

Real estate consultant Vestian on Thursday released a report on warehousing & logistics (W&L), stating that this segment received investments worth USD 1.96 billion during 2024 calendar year against USD 645.8 million in the preceding year.

"Investment inflows surged to 203 per cent year-on-year, driven by the growing demand for warehouses amid the rapid expansion of the quick commerce sector. As a result, this surge in demand resulted in a record absorption of 44.9 million sq ft in 2024, marking a 19 per cent increase over the previous year," the consultant said.

Out of the total leasing of warehousing spaces across seven major cities, third-party logistics firms contributed 33 per cent while engineering and manufacturing 24 per cent.

Shrinivas Rao, CEO of Vestian, said that India's position as a key logistics hub is set to strengthen on the back of positive investor sentiments, announcements in the Union Budget 2025-26, and robust domestic demand.

"The government's continued focus on mega infrastructure projects is expected to further propel growth in the warehousing and logistics sector. However, limited availability of skilled workforce, regulatory challenges, and land acquisition costs may pose a challenge."

Weighted average rentals were in the range of Rs 18-25 per sq ft per month across the top seven cities -- Delhi-NCR, Mumbai, Pune, Chennai, Bengaluru, Hyderabad and Kolkata.

Chennai holds the highest rentals of Rs 24.2 per sq ft monthly in 2024, registering an annual appreciation of 11 per cent. Limited availability of land within the city peripheries pushed the rentals northwards.

Surprisingly, Mumbai has emerged as the most affordable warehousing market in 2024 with Rs 18.1 per sq ft per month average rentals.

"Despite the limited availability of land parcels, average rentals declined by 21 per cent in 2024 over the previous year. This steep reduction could be attributed to the expansion of warehouses in emerging and affordable locations in Mumbai," the consultant said.

While average rentals depreciated by 3 per cent to Rs 22.9 per sq ft per month in Pune, rentals remained largely stable in Kolkata at Rs 20.7 per sq ft monthly.

Moreover, average rentals in Bengaluru declined by 9 per cent in 2024 to Rs 19.3 per sq ft per month.

Hyderabad reported a yearly decline of 5 per cent in rentals whereas NCR witnessed a marginal decrease of 3 per cent over the previous year.