New Report Highlights Key Growth Trends in Industrial Real Estate

National – Sept 27, 2024 – CBRE South Asia Pvt. Ltd, the leading real estate consulting firm in India, has released an insightful report titled Fortifying India’s I&L Landscape with a New Manufacturing Growth Formula. The findings underscore a substantial increase in warehousing demand, closely linked to the rapid growth of the manufacturing sector.

The report reveals that the share of manufacturing-related sectors, including engineering, electronics, and automotive, in total warehousing demand across major cities has jumped from 15% in 2019 to 25% in the first half of 2024. Total leasing for warehousing in these sectors reached 4.1 million square feet in H1 2024.

Pune Leads the Way in Warehousing Growth

Pune has emerged as a leader in warehousing demand, with its share rising from 6% in 2019 to 13% in H1 2024. Other cities like Delhi-NCR and Kolkata also reported significant growth, reaching 18% and 12%, respectively. This increase is driven by global manufacturers adopting a “China + 1” strategy and benefiting from supportive policies such as the Production Linked Incentive (PLI) scheme.

Sectoral Insights: Engineering and Automotive Drive Demand

The engineering and manufacturing sectors are showing remarkable growth in warehouse leasing, increasing from 8% in 2023 to 11% in H1 2024. Key sub-sectors, including domestic appliances and auto components, are at the forefront, reflecting a robust demand for warehouse space.

India’s Economic Resilience and Manufacturing Potential

India’s economy continues to show resilience, supported by a projected GDP growth rate of 6.5-7% over the next few years. The manufacturing sector plays a crucial role, contributing 14% to the GDP and employing over 27.3 million people. The Services PMI recently reached a 14-year high, indicating strong economic momentum.

Government Initiatives and Future Prospects

Government initiatives aimed at enhancing manufacturing capabilities include the GatiShakti National Master Plan and various logistics reforms designed to optimize freight movement. The Production Linked Incentive schemes and other tax reforms are further positioned to reduce costs and attract investment.

Anshuman Magazine, Chairman & CEO of CBRE, emphasized India’s strategic advantages amidst global economic challenges, stating that the country is on the brink of a manufacturing transformation, driven by a stable investment environment and robust government support.

Challenges Ahead and Strategic Recommendations

Despite positive growth trends, challenges remain. Delays in land acquisition, complex regulatory landscapes, and a lack of coordinated efforts across departments could impede progress. The report recommends a nationwide single-window clearance system, improved infrastructure financing, and the establishment of comprehensive industrial clusters to enhance connectivity and efficiency.

A Bright Future for India’s Manufacturing Sector

With its favorable business environment, India stands poised to become a global manufacturing powerhouse. As strategic government initiatives and a skilled workforce align, the nation is well-positioned to capitalize on its manufacturing potential, ensuring sustained growth in both the industrial and warehousing sectors.