Demand for Logistics Parks & Warehousing Explodes in India

29th January 2024

Logistics Parks and Warehousing demand increases in India

India’s logistics sector is witnessing a seismic shift, driven by a booming demand for modern logistics parks and warehousing facilities. According to a recent report by CBRE South Asia, warehousing lease transactions across eight major Indian cities reached a record 39 million square feet in 2023, marking an impressive 8% increase from the previous year. This surge underscores the nation’s accelerating e-commerce growth, burgeoning manufacturing prowess, and ambitious government initiatives that are fueling an unprecedented demand for efficient supply chain solutions.

Leading the charge are global logistics giants like US-based private equity behemoth Blackstone, which plans to expand its warehousing portfolio in India by 2.5 times, reaching a staggering 100 million square feet within the next 3-5 years. Blackstone has already partnered with realty major Hiranandani Group to establish GreenBase Industrial & Logistics Parks across key Indian cities, demonstrating the immense faith global investors have in the sector’s potential.

ESR Group, Asia Pacific’s largest real estate asset manager, is another major player making significant inroads into the Indian market. ESR recently acquired a substantial stake in LOGOS India, a leading developer of Grade A industrial and logistics facilities, signaling its commitment to capitalizing on the nation’s booming logistics landscape. Similarly, Singapore-based CapitaLand has announced plans to invest $400 million in developing industrial parks and logistics facilities in India, further intensifying the competitive landscape.

Beyond private players, the Indian government is playing a crucial role in propelling the logistics sector forward. Initiatives like the development of Multimodal Logistics Parks (MLPs) aim to create integrated facilities with seamless connectivity between various modes of transportation, from rail and road to air and waterways. These MLPs promise significant efficiency gains and cost reductions for logistics players, further spurring investment and activity.

Furthermore, the government’s focus on electric mobility and giga factories projects is creating additional tailwinds for the warehousing sector. With a booming electric vehicle ecosystem on the horizon, the need for modern warehousing facilities to store and distribute EV components and finished products is expected to skyrocket. Similarly, the government’s ambitious plan to establish giga factories for lithium-ion battery production will necessitate specialized warehouse infrastructure, presenting lucrative opportunities for developers and investors.

Unquestionably, the logistics industry in India has a promising future. The industry is expected to grow at an exponential rate in the upcoming years due to strong demand, strategic investments from international players, and supportive government policies. Good logistics parks and warehousing facilities will remain in high demand as businesses in all sectors struggle with intricate supply chains and want quicker delivery times. And with a market that is both competitive and dynamic, driven by both public and private initiatives, India is well-positioned to become a global logistics powerhouse, drawing in more capital and presenting exciting opportunities for all parties involved.