Warehouse: A Good Real Estate Investment In India

There is a new emerging trend in the commercial real estate sector: the demand for warehouses in India is increasing. This sudden demand in this sector is not spontaneous but a result of digitisation in India. 

Since India became digitally more active, people have started shopping online in large quantities, whether it's mobile, chargers, books, furniture, home appliances or other commodities; people order everything online and nowadays, even food is ordered online in large numbers.  

To cater to such a high consumer demand and ensure fast delivery services, companies store everything in a place so they can provide quick service. Companies need large spaces to store things, and warehouses are limited in number.

Because of this high demand for warehouses and low supply, the appreciation rate and rentals are extremely high in this commercial segment, and if you invest in it now, only then can you get the benefits of this investment; let’s explore why.

Why Should You Invest In Warehouses Right Now?

The Indian warehouse sector is expected to reach approx 34 billion dollars with a CAGR of 15.64% by 2027. The demand for the Warehouses outpaced the market by two times. The latest report by Hindustan Times shows that 7 million sq ft of space was supplied, which is the highest in the past two years in the first quarter of 2024.

33% of Grade A Development was supplied alone in Delhi-NCR cities. This robust demand for warehouses translates into an opportunity to earn amazing returns by Investing in them. But what if you don’t Invest in it now?

If you don’t Invest Now In warehouses.

If you don’t invest in warehouses now, you will miss a great opportunity to multiply your wealth; let's understand how:

       •  It has limited Inventory
       •  Lucrative Investment, so demand is high
       •  One-time investment
       •  High Rentals
       •  Best Appreciation 

Warehouses need big land parcels, and not everywhere such big land patches are available, so it is a limited investment option. In there, you might have a better commercial investment option again. Because it is one of the most lucrative investment options, there are thousands of investors knocking on the door to invest, and this is why the prices are increasing every day. This might make it out of your budget in future.

Warehouses are a one-time investment, and because of their open-space design, they require less construction and maintenance. Because of its high rental, it is on every investor’s list. It is an evergreen commercial investment option where no depreciation and maintenance costs vanish your return or make it less valued, and you can earn lakhs of rentals from it every month for an infinite time until we have logistics and e-commerce in our books. 

WAREHOUSING MARKET SIZE IN INDIA

India’s logistics sector plays a key role in the country’s economy. It helps move goods, supports businesses, and boosts different industries. The market for warehouses in India is expected to grow a lot, reaching nearly $35 billion by 2027, with a yearly growth rate of about 15.6%.

Right now, there is more demand for warehouse space than available supply, with demand exceeding supply by two times. A rise in online shopping, increased manufacturing, more consumption, and overall industrial growth drive the growth in this sector. 

Government programs like PM Gati Shakti and the National Logistics Policy are supporting this growth by focusing on technology and standardisation. Other initiatives, such as Performance Linked Incentives and Make in India, are encouraging more efficient supply chains and investment in automated facilities.

The government’s recognition of logistics as an important infrastructure has made it more appealing to investors. There has also been a shift from old-fashioned storage to modern warehouses due to the growth of organised retail, more product choices, and changing shopping habits. Big companies like IndoSpace, Ascendas, Blackstone, ESR, LOGOS, and Mapletree are improving supply chains and cutting costs with high-quality warehouses. 

India Warehousing Market Report 2024

In 2024, the warehousing market in India is booming with both more supply and higher demand. In the first quarter of 2024, 7 million square feet of warehousing space was available, the most in two years. The second quarter saw even more growth, with 7.5 million square feet completed in the top five cities, which is 53% more than the same time last year.

Demand for warehouse space is strong, and third-party logistics companies that handle storage and delivery for other businesses are the biggest users of this space, making up over 40% of the demand.

Investments in the warehousing sector are also high. In the second quarter of 2024, this sector attracted 61% of all real estate investments in India, totalling $1.5 billion. This is an 11-fold increase compared to the same period in 2023.

Looking ahead, the supply of industrial and warehousing space is expected to grow by 13-14% during 2024-25, reaching 424 million square feet. As more people shop online and the government supports manufacturing, absorption rates for warehouse space are expected to rise as well.

Conclusion 

Investing in warehouses in India is a compelling opportunity, given the sector’s robust growth and high demand. With the warehousing market projected to reach nearly $35 billion by 2027, driven by the rise in e-commerce and supportive government policies, current conditions favour substantial returns on investment.

The market’s limited supply and increasing rental rates further underscore the attractiveness of this asset class. As seen in 2024’s booming supply and investment, the warehousing sector promises continued growth and high yields. Investors entering now stand to benefit from significant appreciation and rental income in this thriving commercial segment.