New Delhi [India], August 4 : The first half of the current year saw an 8 per cent increase in warehousing and logistics absorption, reaching 16.6 million sq ft, compared to the same period last year, according to the latest office market report from Vestian, a US-headquartered workplace solutions firm.
However, this figure represents a 26 per cent decrease compared to the second half (H2) of 2023. The reduction is largely due to a significant 74 per cent dip in absorption in the NCR region, the report added.
Mumbai and Pune together accounted for 63 per cent of the total absorption in the first half (H1) of the current year, followed by southern cities (Bengaluru, Chennai, and Hyderabad) at 29 per cent. Notably, Mumbai's share increased from 25 per cent in H1 2023 to 41 per cent in H1 2024, driven by rising demand for grade-A warehouses in areas such as Bhiwandi, Panvel, Uran, Taloja, and Ambernath. In contrast, NCR's share plummeted from 31 per cent to 6 per cent over the same period.
Third-party logistics companies dominated absorption with a 39 per cent share in H1 2024, up from 26 per cent in H1 2023. The Engineering, Manufacturing, Automobiles and Auto Components sectors also saw increased shares, rising from 16 per cent and 4 per cent in H1 2023 to 22 per cent and 9 per cent in H1 2024, respectively.
The sector attracted investments worth USD 1.6 billion in H1 2024, accounting for 42 per cent of the total institutional investment in the real estate sector.
As major economies began to expand again and foreign investor participation in the Indian warehousing sector increased, investments in H1 2024 equalled one-third of the total institutional investment received in the past four years.
Moreover, investments in H1 2024 surged by 4.5 times compared to H1 2023.
Shrinivas Rao, FRICS, CEO, Vestian said, "As participation of foreign investors increased, availability of funds eased in the sector. Moreover, recent government announcements to boost infrastructure developments are likely to reduce logistics costs from 8-9 per cent to 5-6 per cent of the GDP, which in turn will lead to an increase in real estate activities in the warehousing sector."
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