An Aerial View of the Ambala Rajpura Warehousing Market

2021, termed as the year of unbalanced recovery by the UN after the pandemic, turned out to be partial to the real estate sector of the Nation, and the warehousing market was not left out. The restoration of human mobility and revitalization of consumer demand spurred the warehousing market to record large transaction volumes along with robust rent growth across markets, which contributed towards India’s sparked recovery of 8.7% in GDP levels in FY 2022 compared to a contraction of 6.6% in the previous period.

As per a report by Knight Frank, the leasing activity in the Indian warehousing sector across the top 8 markets rose by 62%, marking a historic high at 51.3 million sq. ft.


Still under the transformational phase, India’s warehousing markets which are among the fastest growing markets are expected to expand exceptionally over the coming years, not only across the eight primary cities (NCR, Mumbai, Pune, Bengaluru, Chennai, Hyderabad, Kolkata, Ahmedabad) but also across the secondary markets.

Taking the lens towards one such secondary yet important market, we look towards the north of the nation, ‘The Ambala-Rajpura warehousing market’. Strategically located on the Punjab-Haryana border or the Shambhu barrier along the Grand Trunk Road, Banur-Tepla Road, and Zirakpur, the Ambala-Rajpura warehousing market is unorganized with warehousing facilities spread across several locations in Punjab and Haryana in a triangle.

Source: Knight Frank Research

The market caters to several Tier II cities in northern India and has a handful of regional players with Grade A warehousing footprint on this node, considering its huge potential to serve multiple cities in Punjab, Himachal Pradesh, and Jammu & Kashmir.

As per the report, in FY 2022, the Ambala-Rajpura warehousing market accounted for 1.4 mn sq.ft. (0.13 mn sq.m.) leasing i.e. a 19% Y-o-Y growth over the previous financial year, with 71% of spaced leased in the NH44 Rajpura cluster and 29% at Banur-Tepla cluster.

What is contributing to the growth?

It has been noted that many national players are actively looking to set up their facilities in the zone. The strategic importance and availability of relatively larger land parcels have increased the leasing activity in the market, as many developers look to take exposure to the asset class.

When asked about the factors contributing towards this significant growth in the secondary warehouse market of the north, Mr. Vivek Juneja, Founder and Managing Director, Varuna Group said, “One of the major reasons for the increase in leasing activity in the Ambala-Rajpura belt is due to the upgradation from traditional C-grade warehouses to more automated and compliant modern grade-A warehouses.”

He goes on to add, “The Ambala-Rajpura belt is a major catchment area for industrial belts in manufacturing. It supports the modernization of the supply chain in the Ambala-Rajpura cluster which has led to an increase in growth. The region near the manufacturing plants (unionized zone) is the preferred location as it keeps the throughput high, transportation cost low, sorting time, and reduces order to consumption time.”

On similar lines, Mr. Rajesh Jaggi, Vice Chairman – Real Estate, Everstone says, in the case of the Ambala-Rajpura cluster, its location plays a key role.

The area is centrally located – about one to three hours in proximity to major Tier-II cities including Ludhiana, Jalandhar, Ambala, Amritsar, Shimla, the Chandigarh tri-city area, and Dehradun. The cluster provides easy access to the northern states of Punjab, Haryana & Himachal Pradesh. The state of Uttarakhand, too, is geographically closer to Rajpura than Delhi NCR, hence, an uptick in demand can be seen around leasing in the region.

Source: Knight Frank Research

Rajpura, referred to as the ‘Gateway to Punjab’, is situated at the junction of NH44 (Old NH1), connecting New Delhi to Attari in Punjab, and NH7 (Old NH64) which runs from Chandigarh to Dabwali. Along with Ambala, Rajpura provides good road and rail connectivity to six to seven cities in north India.

Citing other reasons, Mr Jaggi says “There is high growth in demand and consumption across Tier II cities in India. This, coupled with cheaper rentals, shows a visible shift in demand for these locations compared to the ‘big cities’.”

Furthermore, the government’s decision to hold the logistics and warehousing sector in a place of importance has led to the formulation of new policies that have given the industry a boost and had a significant impact on its growth.

“On the back of these reforms, we have seen a reduction in red tape along with private investment being incentivised from both Indian and foreign players. Private developers like IndoSpace have benefited with these moves and we have established our footprint in traditional industrial areas such as the Ambala-Rajpura market,” Mr Jaggi said.

Strategic moves like the PM Gati Shakti scheme and the recently announced National Logistics Policy and warehousing standardization norms are expected to further amplify this growth. They will also help formalize the warehousing sector, away from the traditional, unorganized style in how it previously functioned.

Mr Jaggi adds, “With more investments coming in, it is a great opportunity to deploy cutting-edge, technology-led advanced solutions such as high-quality, temperature-controlled warehouses and taller structures with a vast amount of vertical storage solution options. “As an additional boost, the Central Government has also engaged with industry bodies and leaders to understand how to create the best environment to enable economic expansion which will go on to develop better understanding between the industry and government-enabled development. This will ultimately create a network effect to upgrade infrastructure across the country.

Growing 3PL and E-commerce Sectors

The Covid-19-led disruptions proved to be beneficial for Tier II warehousing clusters such as Ambala-Rajpura as the demand for warehousing space has been increasing steadily. This consumption story that has been written in this fiscal is validated, given that a large percentage of space uptake in the area is due to growth among e-commerce, retail, and FMCG sector players during 2022. 

The growing Grade A warehousing infrastructure in the cluster will support the modernization of the supply chain and attract more occupiers from such sectors in the future. Of the total warehouse space leased in FY 2022, 30% was concentrated in 3PL, followed by 26% leased by e-commerce.

Source: Knight Frank Research

Highlighting that the growth witnessed in 3PL and e-commerce, is largely driven due to increasing levels of consumer spending, Mr. Jaggi says, E-commerce has levelled the playing field among brands and raised awareness across geographies. Traditional, industrial centres from regions such as Jalandhar (sporting goods) and Ludhiana (apparel) have established themselves as major vendor markets for e-commerce players in the northern belt. They have evolved as major consumption centres as well over the recent years.”

The trend was largely accelerated during the Covid-19 pandemic with higher adoption of e-commerce services and an increased sense of brand awareness via social media channels.

“This growth in consumer spending, along with the rapidly maturing Indian economy has also drawn interest from national, large-scale modern retail players and FMCG giants that are looking at these regions as the next growth frontiers.” 

The other sectors leasing warehouse spaces in the region are retail, accounting for 23% share, followed by FMCG at 15%. The remainder was occupied by Other Sectors holding a 6% share, while FMCD held a share of 30%, said the report.

MMLPs painting a brighter future  

Due to the Indian supply chain sector being plagued by an unfavourable intermodal mix, underdeveloped material handling/warehousing infrastructure, inefficient fleet mix, underdeveloped road infrastructure, and procedural complexities, the government is developing Multi Modal Logistics Parks (MMLP) across 35 nodes, which account for approximately 60% of the freight movement in the country.

Reducing touch points across the multiple legs of transportation, the MMLPs in the logistical framework of the Ambala-Rajpura warehousing market look to have a bright future. “It allows a greater opportunity for companies to consolidate their load, reduce their stock transit points and present themselves with a suitable ecosystem to provide for more value-added services,” Mr Jaggi said.

“Ambala’s positioning in the parallel development of the Amritsar-Delhi-Kolkata industrial corridor, and the Eastern Dedicated Freight Corridor, places the ‘Ambala-Rajpura’ region as one of the more suitable geographies for multi-modal operations. The Government’s push to encourage Indian industries to ‘manufacture for the world’, along with the growing consumption story from the region, will attract further private investment in the region to complement these infrastructure initiatives,” he added.

The ambitious initiative set by the Ministry of State Transport to promote the development of 35 nodal MMLPs across India reflects the confidence that the government and industry have and the promise that these parks hold.

In a Nutshell

An important warehousing market in the south of Punjab, the Ambala Rajpura Warehousing Cluster has shown promising growth in FY2022. The growing consumer demand, cost-effective leasing, and its strategic position, further supported by government policies, have helped the cluster emerge as an eye-catching market for many. One might argue that the market is at present attracting more developers than the primary large warehousing markets. While the growing e-commerce and 3PL sector will propel further growth in the region through the development of more and more Grade A Warehousing and organized logistical operations, the government’s decision to develop MMLPs across the nation will also push the market to new heights. 

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