New Delhi, 1st August 2024: The first half of 2024 saw a notable 8% increase in warehousing and logistics absorption, reaching 16.6 million square feet. Despite this growth, the absorption rate decreased by 26% compared to the second half of 2023, largely due to a sharp 74% decline in absorption in the National Capital Region (NCR).
Regional Insights
Mumbai and Pune dominated the warehousing and logistics sector in H1 2024, collectively accounting for 63% of the total absorption. Mumbai’s share surged from 25% in H1 2023 to 41% in H1 2024, driven by heightened demand for grade-A warehouses in areas such as Bhiwandi, Panvel, Uran, Taloja, and Ambernath. In contrast, NCR’s share plummeted from 31% to just 6%, reflecting a significant drop in activity. Chennai, however, experienced a remarkable 191% increase in absorption, reaching 1.5 million square feet due to the low base effect from the previous year.
City-Wise Absorption Data
| City | H1 2024 (Mn sq ft) | H2 2023 (Mn sq ft) | H1 2023 (Mn sq ft) | % Change H1 2024 vs H1 2023 | % Change H1 2024 vs H2 2023 |
|---|---|---|---|---|---|
| Bengaluru | 1.4 | 1.9 | 1.7 | -19% | -27% |
| Chennai | 1.5 | 3.0 | 0.5 | 191% | -52% |
| Hyderabad | 1.9 | 1.8 | 1.3 | 48% | 7% |
| Pune | 3.6 | 4.4 | 2.6 | 40% | -18% |
| Mumbai | 6.8 | 6.4 | 3.8 | 80% | 7% |
| Kolkata | 0.3 | 0.8 | 0.8 | -65% | -63% |
| NCR | 1.1 | 4.1 | 4.7 | -77% | -74% |
| Total | 16.6 | 22.4 | 15.4 | 8% | -26% |
Sector-wise Absorption Trends
Third-party logistics (3PL) companies led the absorption with a 39% share in H1 2024, up from 26% in the previous year. The engineering & manufacturing sector also saw its share increase to 22% from 16%, while the automobile and auto components sector grew to 9% from 4%.
| Sector | H1 2024 | H1 2023 |
|---|---|---|
| 3PL | 39% | 26% |
| Engineering & Manufacturing | 22% | 16% |
| Automobile & Auto Components | 9% | 4% |
Investment Highlights
The warehousing and logistics sector attracted USD 1.6 billion in investments during H1 2024, representing 42% of the total institutional investments in real estate. This investment amount equals one-third of the total institutional investment received over the past four years and marks a 4.5-fold increase compared to H1 2023.
Key deals included:
- USD 1.5 billion investment by KKR and Abu Dhabi Investment Authority (ADIA) in Reliance Retail Ventures’ warehousing assets, accounting for 96% of the sector’s total investment.
- CapitaLand India Trust (CLINT) signed a forward purchase agreement with Casa Grande Group for three industrial facilities at OneHub Chennai, valued at approximately USD 32.3 million.
- Goa Investment Promotion and Facilitation Board (Goa-IPB) signed a MoU with TVS Industrial and Logistical Parks (TVS ILP) for developing a grade-A warehousing and logistics park in Verna Industrial Estate with an investment of USD 15.6 million.
Rental Trends
Weighted average rentals slightly declined by 3% to INR 21.6 per square foot per month in H1 2024. Bengaluru saw the highest rental decline of 8%, while Hyderabad experienced a 7% decrease. Conversely, Pune’s rentals surged by 30% to INR 27.1 per square foot per month, and Chennai saw a 22% increase.
| City | H1 2024 (INR/sq ft/month) | H2 2023 (INR/sq ft/month) | H1 2023 (INR/sq ft/month) | % Change H1 2024 vs H1 2023 | % Change H1 2024 vs H2 2023 |
|---|---|---|---|---|---|
| Bengaluru | 20.2 | 21.2 | 22.0 | -8% | -5% |
| Chennai | 24.3 | 21.9 | 19.9 | 22% | 11% |
| Hyderabad | 19.1 | 20.0 | 20.5 | -7% | -4% |
| Pune | 27.1 | 23.5 | 20.9 | 30% | 15% |
| Mumbai | 18.7 | 22.9 | 19.7 | -5% | -18% |
| Kolkata | 19.1 | 20.6 | 18.2 | 5% | -7% |
| NCR | 23.5 | 22.7 | 22.5 | 5% | 4% |
| Total | 21.6 | 22.3 | 22.3 | -3% | -3% |
Conclusion
The warehousing and logistics sector continues to show strong growth, with significant investments and notable shifts in regional and sectoral absorptions. Despite a decrease in overall absorption compared to the previous half-year, the sector remains dynamic with increased investment and evolving rental trends.
Also Read: Industrial & warehousing demand remains healthy with about 13 mn sq ft of leasing in H1 2024
