India’s industrial and warehousing sector records robust demand in H1

V Nagarajan

Chennai and Delhi NCR led the demand, cumulatively accounting for about half of the overall leasing in H1 2024. Third Party Logistics (3PL) players continued to be the top occupier of warehousing space, contributing to about 36% share in overall demand during the first half of the year.

Interestingly, demand in Chennai almost doubled in H1 2024, compared to the same period last year and was largely driven by warehousing requirements of 3PL players. At a micro market level, warehousing space uptake was more than 1.5 million sq ft each in Bhiwandi (Mumbai), Chakan-Talegaon (Pune) and Oragadam (Chennai), according to Colliers India survey.

“On a quarterly basis, Q2 2024 saw about 6 million sq ft of industrial and warehousing demand across the top five cities, a 48% rise YoY. With 1.8 million sq ft of leasing and 30% share, quarterly demand was significantly driven by Delhi NCR. With significant completions in first half of the year, 2024 is likely to witness Grade A supply infusion to the tune of 20-25 million sq ft.,” said Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

3PL demand steady: While 3PL players continued to dominate the demand with about 36% share, space uptake by players from engineering, FMCG and electronics segments was significant with 12-16% share each. Interestingly, both engineering and electronics segments witnessed over 1.7X times leasing activity in H1 2024, compared to the corresponding six-month period of 2023. Going ahead, driven by conducive industry-specific policies and an enabling regulatory framework, diverse segments are likely to propel the industrial and warehousing space demand in India.

“Interestingly, the manufacturing PMI has been in expansionary zone since July 2021 and remained close to 60 in the last few months. Furthermore, recent budgetary announcements will improve logistics efficiencies, catalyse demand and attract investments in the industrial and warehousing sector. Additionally, increasing platform level investments will lead to influx of superior quality industrial and warehousing space in the next few years.” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

With supply infusion exceeding the demand for Grade A warehousing spaces, overall, India vacancy levels increased by 210 basis points (bps) on an annual basis and stood at 12.2% at the end of H1 2024. Developer anticipation of heightened demand in upcoming quarters, has resulted in fresh supply of 14.4 million sq ft in H1 2024, a 35% YoY rise. With about 5.7 million sq ft of new industrial and warehousing developments, Delhi NCR accounted for about 40% share in overall completions in first half of the year. Notably, Q2 2024 witnessed about 7.5 million sq ft of completions in top five cities of the country, an 53% YoY rise. Q2 2024 also marked the highest quarterly supply infusion in the last two years. Amidst healthy demand and high-quality supply infusion, rentals in key micro markets saw an appreciable uptick.

Large sized deals: During H1 2024, large deals (>200,000 sq ft) accounted for about 35% of the demand. Although a vast majority of these larger deals came from 3PL players, electronics and FMCG occupiers too had large warehousing space requirements. On a city level, Chennai followed by Delhi NCR dominated the chunk of large-sized deals.

Is loan available for NRIs to invest in land in India?  Can we repatriate the sale proceeds if we sell the land at a later date?  Please clarify.  Kapil Patel, Sharjah.

 Loans for investment in vacant plots are available for NRIs on similar interest rates offered to resident Indians. 

The loan amount depends on the value of the property from 75 per cent to 90 per cent. 

The maximum repayment period is 15 years.  While computing the land value, the lender may take the guideline value of the property and not the market value.

Can I invest in a property along with a resident who is my relative?  Are there any restrictions while investing in joint names?  Akhtar Hussain, Dubai

 There are no restrictions for joint investment and you can be owner of a house jointly with a resident.  But there are certain ground realities you should follow.

If you are paying your share through forex, you should make direct payments to the builder as clubbing it with your co-owner in India would pose formidable challenges to convince the authorities while repatriating at a later date. 

The share of each co-owner should be clearly defined and ascertainable for computing the amount of income from house property.  Home loans should be taken either strictly in individual names or jointly in the same ratio.