Manufacturing Demand Fuels 23M Sq Ft Warehouse Transactions in H1 2024: Report

New Delhi, Jul 31 (KNN) In a significant development for India's industrial real estate sector, warehouse transactions across eight primary markets in the country reached 23 million square feet during the first half of 2024, according to a recent report by Knight Frank India.

The report reveals that approximately 55 per cent of the transactions occurred in 'Grade A' spaces, indicating a preference for high-quality warehousing facilities. This trend underscores the increasing sophistication of the Indian warehousing market and the demand for modern, efficient storage solutions.

Mumbai emerged as the top market, accounting for 20 per cent of the total warehousing volume. Delhi-NCR followed closely, representing 17 per cent of the transactions.

This regional distribution highlights the continued importance of these major metropolitan areas in India's logistics and supply chain networks.

The manufacturing sector's robust demand has effectively counterbalanced the slowdown in e-commerce, diversifying the market's occupier profile. This shift demonstrates the adaptability of the warehousing sector and its ability to cater to changing economic dynamics.

In terms of rental rates, Pune leads as the most expensive warehousing rental market, with average rents at Rs 26 per sq ft per month. Kolkata and Mumbai follow at Rs 23.8 and Rs 23.6 per sq ft per month, respectively. These figures reflect the premium placed on warehousing space in key industrial and commercial hubs.

Rental growth trends show Pune and Chennai witnessing the highest increase at 4 per cent year-on-year, while NCR and Kolkata saw a 3 per cent rise. This growth in rental rates suggests a healthy demand-supply balance and the increasing value placed on quality warehousing facilities.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, commented on the findings: "Demand from the manufacturing sector has compensated for the lull in e-commerce and helped broad base the market's occupier profile."

He also noted that while land availability for warehousing development remains a challenge, high institutional interest is expected to facilitate the development of high-quality supply.

The report highlights India's favourable position in attracting global manufacturing giants. Companies such as Apple, Samsung, Foxconn, and TSMC are expanding their manufacturing bases in the country, contributing to the decentralisation of global manufacturing capacity.

This trend is likely to further boost demand for warehousing and logistics facilities in the coming years.

Looking ahead, Baijal expressed optimism about the sector's prospects: "India's robust fiscal position and resilient economy are well-positioned to sustain and enhance the warehousing market's stability and growth potential for the remainder of fiscal year 2024."

This positive outlook suggests continued growth and investment opportunities in India's warehousing sector.

(KNN Bureau)