International real estate advisory firm, Savills India’s recently published data reveals that industrial and warehousing space absorption stood at 44 mn sq. ft in 2021 to include 35.1 mn sq. ft from Tier I cities and 8.6 mn sq. ft from Tier II & III cities. Inspite of Covid restrictions and lockdowns impacting construction activities, India witnessed a fresh supply of 45 mn sq. ft. in 2021 where 36 mn sq. ft was from Tier I cities and 8.9 mn sq. ft from Tier II & III cities.
Supply & Absorption in Tier I (2021 vs 2020)
|Supply (Mn sq. ft)||36||22||63.6%|
|Absorption (Mn sq. ft)||35.1||26||35%|
|Stock (Mn sq. ft)||266||230||15.6%|
Similar to 2020, 3PL and e-commerce sectors continued to drive warehousing demand accounting 62% of the total absorption in 2021, followed by manufacturing sector at 14%.
Among the major cities in India, Delhi NCR led with the highest absorption in 2021 at 18% followed by Pune at 15%. Mumbai and Bangalore saw absorptions at 14% and 11% respectively.
In addition, the Tier II & Tier III cities such as Rajpura, Lucknow, Coimbatore, Jaipur, Guwahati, Bhubaneswar, Nagpur, Kochi/Ernakulam, Indore, Hosur, and Patna witnessed around 8.6 mn sq. ft of absorption in 2021 – accounting for 20% of the total absorption. These cities are poised to gain further momentum in 2022 and 2023 with e-commerce and 3PL firm capitalizing on consumption-driven growth and pushing the demand for warehousing space.
Rental values remained stable in 2021 across major cities with new projects delivered with improved specifications and of high quality environmental and health & safety (EHS) standards.
The report further highlights that the industrial and logistics sector witnessed investments exceeding USD 1.5 billion in 2021 making the sector the highest after the office sector to attract such investments.
Work From Home and social distancing norms have further fueled the e-commerce demand and therefore growth of the Indian logistics and warehousing sector. Rising popularity of quick commerce companies and e-commerce companies focusing on improving the delivery time and customer experience will result into rapid growth of Urban warehousing. Besides, strong macro-economic fundamentals, government initiatives favoring infrastructure development in transport, water, power and communications and support to the growing sectors are likely to drive manufacturing and warehousing demand in India in 2022”.Srinivas N, Managing Director, Industrial and Logistics, Savills India
According to Savills India, growing demand for warehouse space for manufacturing, e-commerce and organized retail are likely to drive warehousing demand in 2022. Besides, Warehousing Policy envisaged by NHAI would be out in 2022, which aims to develop warehousing zones on the National Highways Authority of India (NHAI) land banks under Public Private Partnership (PPP) mode, proposed national logistics policy by department of commerce likely to ease the logistics bottlenecks and development of Multi-Model Logistics Parks (MMLPs) will certainly push the growth of warehousing in the country.
Savills India is a group company of Savills Plc. and is a premier professional international property consulting ﬁrm. Savills India provides services across office leasing, project management, capital markets, valuations, research, consulting, industrial and logistics, and residential services.