Indian Market Attracts $1.5 Billion Investment in First Nine Months of 2024

The Indian warehousing sector witnessed robust growth in Q3 2024, with leasing volumes hitting 14.65 million square feet (mn sq ft) across eight key markets, according to Knight Frank India’s India Warehousing Market Report – Q3 2024. This marked a 20% year-on-year (YoY) increase, with Grade A spaces constituting 41% of transactions.

The manufacturing sector played a pivotal role, accounting for 37% of total transactions in the first nine months of 2024. This shift, where manufacturing outpaced the traditionally dominant 3PL sector, underscores India’s evolving industrial landscape.

Pune Leads Leasing Volumes, Followed by Chennai and NCR

Pune emerged as the top-performing market, contributing 23% to the total warehousing volume. This growth was driven by the 3PL sector’s demand for high-quality spaces. NCR followed with a 13% share, propelled by the combined efforts of 3PL and manufacturing industries.

Key Market Performances (Q3 2024):

Pune: 3.4 mn sq ft (+17% YoY)

NCR: 2.0 mn sq ft (+59% YoY)

Kolkata: 2.1 mn sq ft (+122% YoY)

Mumbai: 1.1 mn sq ft (-21% YoY)

Overall, year-to-date (YTD) transactions reached 37.54 mn sq ft, growing by 4% YoY. Despite regional disparities, the warehousing market has shown steady expansion.

Rising Rents Highlight Limited Supply

Warehousing rents surged across most markets, reflecting strong demand and limited supply. Pune led with an average rent of ₹26.9 per sq ft/month, marking a 4% YoY increase. Ahmedabad followed with 3.5% YoY rental growth.

Q3 2024 Average Rents:

Pune: ₹26.9/sq ft/month (+4%)

Chennai: ₹23.9/sq ft/month (+3%)

Mumbai: ₹23.9/sq ft/month (+2%)

Manufacturing Sector Dominates Transactions

Manufacturing industries accounted for 14 mn sq ft of leased space YTD Q3 2024, representing a 37% market share. Sectors like automotive, energy, and chemicals drove this demand, highlighting India’s rising appeal as a global manufacturing hub.

Meanwhile, the 3PL sector ranked second with a 31% share, reflecting consistent activity despite a slight market share decline. Retail and e-commerce sectors also showed impressive growth, with their transaction volumes rising 35% and 34% YoY, respectively.

Sector-Wise Transaction Volume (YTD Q3 2024):

Manufacturing: 14.0 mn sq ft (-4% YoY)

3PL: 11.5 mn sq ft (+1% YoY)

Retail: 4.1 mn sq ft (+35% YoY)

E-commerce: 3.3 mn sq ft (+34% YoY)

Robust Stock, Healthy Vacancy Rates

India’s top eight warehousing markets hold a cumulative stock of 479 mn sq ft, with Mumbai accounting for 31% of the total. Despite high transaction volumes, vacancy rates remained healthy at 10.3% in Q3 2024. Bengaluru reported the highest vacancy at 18.9%, followed by Hyderabad (14.6%) and NCR (14.5%).

A Bright Future for Indian Warehousing

Shishir Baijal, Chairman and Managing Director of Knight Frank India, highlighted the sector’s resilience, stating, “Anchored by manufacturing and 3PL, India’s warehousing market has demonstrated consistent growth. The robust demand, coupled with private equity interest, underscores the sector’s pivotal role in driving economic progress.”

With a dynamic occupier base, rising rents, and expanding manufacturing activity, India’s warehousing market is poised for sustained growth, further strengthening its role in the country’s economic development.