Manufacturing sector driving up warehouse property deals in India’s top cities
The manufacturing sector is driving up warehouse transactions across eight key Indian markets which has shot up by 20 per cent to 14.65 million square feet (mn sq ft) in Q3 2024 (July - September) compared to the same period last year. Notably, 41 per cent of these transactions involved Grade A spaces, according to a Knight Frank India report released on Tuesday.
Mumbai: The manufacturing sector is driving up warehouse transactions across eight key Indian markets which has shot up by 20 per cent to 14.65 million square feet (mn sq ft) in Q3 2024 (July - September) compared to the same period last year. Notably, 41 per cent of these transactions involved Grade A spaces, according to a Knight Frank India report released on Tuesday.
The manufacturing sector outperformed the third-party logistics (3PL) sector in leasing volume. This is a significant shift, as 3PL, which is a business that manages a company's supply chain and distribution services, has traditionally dominated the Indian warehousing market, the report by the property consultancy firm states.
Manufacturing industries accounted for 37 per cent of total transactions, leasing 14 mn sq ft from January - September 2024.
The year-to-date transaction volumes reached 37.54 mn sq ft in the first nine months of 2024, marking a 4 per cent YoY increase as occupiers steadily expanded their footprint, the report said.
Transaction volumes were well distributed across markets. Pune, the leading market, accounted for 23 per cent of the total warehousing volume, driven primarily by the 3PL sector. NCR was the second most prolific market, representing 13 per cent of the total warehousing area transacted during the period, with 3PL and manufacturing sectors driving volumes, according to the report.
Transaction volumes were well distributed across markets, with Pune leading at 23 per cent of the total warehousing volume, driven predominantly by the 3PL sector. NCR followed, contributing 13 per cent to the total transacted area, with significant activity from the 3PL and manufacturing sectors.
Pune emerged as the most expensive warehousing rental market among the eight cities analysed in the country, with an average rent of Rs 26.9/sq ft/month. Kolkata, Chennai, and Mumbai followed at Rs 23.9/sq ft/month each. Healthy rental growth across markets has been driven by limited supply in recent times. Pune also led in value appreciation, recording nearly 4 per cent YoY rental growth in Q3 2024, while Ahmedabad ranked second with a year-on-year growth of 3.50 per cent during the same period.
The retail and e-commerce occupiers have been particularly active so far in 2024 with volumes transacted increasing by 35 per cent and 34 per cent YoY, respectively. While still much smaller than their counterparts, their market shares have grown to 11 per cent and 9 per cent respectively and signal the continuing broad-basing of the warehousing market’s occupier base, the report added.
Knight Frank India CMD Shishir Baijal said, “Robust investments and a resilient Indian economy have sustained corporate confidence, driving consistent activity in the warehousing sector. The rising trend highlights the sector's pivotal role in supporting India’s economic growth and its readiness for future opportunities.”
