India’s Beneficial Increase In Warehouse Investment

The warehouse sector has recently experienced rapid growth. The warehousing business has emerged as a resilient asset class and continues to grow within the real estate sector, despite a pause in demand and supply during the epidemic. Investors from abroad and onshore are optimistic about the Indian storage industry.


With logistics making up 20% of deal activity, warehousing and logistics are attracting more investor interest. This year, 32–34 million square feet of additional warehouse space are anticipated to become operational, according to CBRE estimates for 2022. With a few recent joint venture announcements, investment in data centers and a warehouse in Bangalore, for example, has also increased. The ongoing growth of 3PL firms and e-commerce is paving the road for this industry.


The positive benefits of e-commerce


With the Indian e-commerce sector pushing companies to increase supply and storage to deliver goods to clients fast, the logistics and warehousing company market is anticipated to reach around Rs 2,245 billion in 2026, growing at a compound annual growth rate (CAGR) of 10.90 percent. The link between manufacturers and consumers is crucially dependent on logistics and warehousing.


Quick-commerce (Q-commerce) players are boosting their inventory levels in carefully chosen locations close to cities as they compete for supremacy in the sector. Storage needs have increased in tier-1 and tier-2 cities due to the increased demand for stocking and the shortened delivery schedule.


As a result, the industry will need to make a large investment in Grade A urban warehouses.

The Indian cities with the most warehouse investment are Ahmedabad, Bangalore, Pune, Chennai, Mumbai, and Delhi.


3PL is revolutionizing logistics:


The expansion of third-party logistics is the second-biggest driver of the increase in e-commerce and demand for warehouses (3PL). The trend indicates that most businesses engage in 3PL services rather than handling their logistics, which enables better cost and time control of the supply chain. A CAGR of 19 percent is predicted for the 3PL market in India, which is presently valued at USD 3.5 billion and is expected to reach USD 11.9 billion by 2025.


Purchasing warehouse equipment:


Companies must make investments in the adoption of new technology if they want to remain competitive. Customers’ ease of conducting business should always come first. The choice to invest, however, is a challenging one. Large-scale technological investments in warehousing need the execution of intricate projects and demand technical and specialized aptitude. As a result, it’s important to recognize the need and strike a suitable balance between profit expectations and capital risk.


A new focus for international investors:


Additionally, as developers anticipate client needs and guarantee revenue flows, building built-to-suit warehouses in prime locations is becoming more alluring to investors. Return on investment is ensured by the booming demand from industries including automotive, healthcare, retail, FMCG, and electronics (RoI).


More and more new players are opening warehouse facilities today. In 2022, larger warehouses are anticipated. Reports predict that the warehouse sector will expand at a 20 percent CAGR from 31.7 million square feet in 2020–21 to 45.9 million square feet in 2022–23.


Compared to commercial premises, warehousing has attracted substantially more interest from investors in the real estate sector. With low labor costs, business-friendly policies, and increased investor interest in the warehousing and logistics sector, India can quickly establish itself as the ideal manufacturing hub for the global industry. It is also on the path to becoming an economic hub with low labor costs and business-friendly policies.


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