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India Needs $3.8 Billion Funding To Meet Storage Demand In Three Years: Report

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A new report from CREDAI-Anarock suggests India will see demand for 223 million sq.ft for Grade A warehouses over the next three years, requiring approximately $3.8 billion in funding.

Of these, the industry already has $900 million “dry powder” financing from existing liabilities, according to the CREDAI-ANAROCK report titled ‘India Warehousing – A Sunrise Sector’. Demand for Grade A storage facilities is continuously increasing due to the direct and indirect beneficial effects on overall operational efficiency.

“Warehousing in India has received a lot of attention from investors as the country is poised to upgrade its supply chain to reach its goal of a $5 trillion economy,” said Shobhit Agarwal, managing director and chief executive officer at Anarock Capital Advisors.

Demand for warehousing is not only increasing in metro cities, but is also seeing a rapid increase in Tier 2 and Tier 3 cities, the report said.

According to the report, A warehousing take-up has increased from 34 million square feet in 2018 to 48.5 million square feet in 2021 with a compound annual growth rate (CAGR) of 12.6%.

Meanwhile, supply in this category increased from 37.8 million square feet to 51 million square feet in the same period at a CAGR of 10.6%, the report said.

“Demand for warehouses will continue to grow in the future as a result of increasing demand due to increased consumption. The government’s relentless policy support in recent years, including the status of infrastructure for the logistics sector, GST implementation, allowing 100% FDI in warehousing and warehousing has been instrumental in attracting investment in this sector. sector,” Agarwal added.

3PL, e-commerce is driving demand for warehouses


Third-party logistics (3PL), e-commerce, and manufacturing and automotive sectors account for 78% of warehouse lease space in the seven largest cities, the report said.

3PL has the highest lease space with 42%, followed by e-commerce and manufacturing & automotive with 18% each.

Sector Share in rental space
3PL 42%
E-commerce 18%
Manufacturing and Automotive 18%
Retail 12%
Consumer Electronics and FMCG 8%
Pharma/Life Sciences 2%

Source: Anarock ReportIn terms of storage space rental in the top 7 cities, Mumbai Metropolitan Region (MMR) has the highest average rent at ₹27/sq.ft and Hyderabad the lowest at ₹20/sq.ft.

According to the report, the western micromarkets of Bhiwandi, Chakan and Panvel/Taloja dominate the Class A share of storage space renting at 41%.

“Warehousing has become one of the most preferred asset classes for investors and developers to balance their real estate portfolios. The warehousing segment is reach-bound and generates a high turnover. Although the IRR (internal rate of return) is higher, the risk is lower and production is faster. In addition, this sector is consumer-led, unlike other developer-led sectors,” said Harsh Vardhan Patodia, President – CREDAI and CMD at Unimark Group.

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