India’s industrial and logistics space take-up surpasses 39m sqft in 2024

Robust leasing activity and continued expansion by institutional-backed developers resulted in a 7 per cent year-over-year (Y-o-Y) increase in total Industrial and Logistics (I&L) development completions in 2024 across India, reaching 38.6 million sqft, according to CBRE’s.

Mumbai, Chennai and Bengaluru emerged as key contributors to this growth, collectively accounting for over half of the total supply addition in both H2 2024 and the entire year.

Despite a moderate slowdown in the first half of the year, overall leasing activity in the I&L sector surpassed the previous year’s record, exceeding 39 million sqft in 2024.

Space absorption remained strong particularly in the second half of the year, experiencing a robust 17 per cent Y-o-Y growth. This was driven by a revival in demand from leading e-commerce companies, the expansion by quick-commerce operators aimed at enhancing customer service and minimising lead times, and the aggressive growth initiatives by third-party logistics (3PL) and fast-moving consumer goods (FMCG) players.

Delhi-NCR, Bengaluru and Kolkata accounted for almost 60% of the leasing activity during the year and in H2 2024. Additionally, these three cities registered an expansion in space take-up during July-December 2024 compared to last year.

Third-party logistics (3PL) providers continued to dominate the leasing activity, holding a share of -41% in CY2024, a marginal decrease from 44% in CY2023. Occupiers across various sectors, including e-commerce, retail and manufacturing, are increasingly outsourcing their supply chain operations to 3PL companies to meet their storage requirements, gain greater flexibility, lower costs, and mitigate challenges in sourcing labour.

Engineering and manufacturing (E&M) firms remained active in 2024, registering a space take-up share of 18% (as compared to 17% in CY2023). Various government-driven infrastructure initiatives, policy measures, such as the Production Linked Incentive (PLI) scheme and Make in India 2.0, have further bolstered the country’s manufacturing ecosystem. This has attracted investments across the sector, leading to an increased demand for warehousing space from these companies.

Driven by sustained growth in domestic consumer demand, both e-commerce and FMCG companies expanded their share of occupied space throughout 2024 and in the second half of the year compared to the corresponding period in 2023. Notably, e-commerce’s share doubled from 5% in H2 2023 to 10% in H2 2024, while FMCG’s share more than doubled from 4% to 9% over the same period.

Consistent with the trend observed throughout 2024, 3PL providers led the space absorption in H2 2024, accounting for a 42% share. E&M firms followed with 18%, while retail and e-commerce companies each contributed ~10%.

Small-sized transactions (under 50,000 sqft) remained the predominant segment of leasing activity in 2024, representing 43% of the total, consistent with the previous year. Medium-sized transactions (50,000-100,000 sqft) and large-sized transactions (exceeding 100,000 sqft) each accounted for 28% of the overall space absorption.

The share of small-sized deals (<50,000 sqft) decreased marginally to 40% in H2 2024 as compared to 42% in H2 2023. Additionally, the share of large-sized deals (more than 100,000 sqft) increased from 29% in H2 2023 to 32% in H2 2024.

Limited availability of high-quality space and rising land and input costs, is projected to exert upward pressure on warehousing rentals across key micro-markets in major cities. Developers will likely continue prioritising green and sustainable facilities as occupiers actively seek to reduce their carbon footprint and commit to ambitious ESG objectives. Occupiers and investors are expected to remain active in India’s leading tier-II cities, with Chandigarh, Hosur, Jaipur, Lucknow and Vizag projected to be the key focal points for warehousing expansion in these emerging regions.

Can an NRI get to invest in land in India? Is repatriation of sale proceeds available while selling 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.

You can’t sell land and repatriate the sale proceeds but you can build house on it and then sell and repatriate the sale proceeds including the value of the land.

My relative wishes to gift immovable property located in Pune? Does it require registration? Avinash Rana, Dubai

Gifting immovable property should be accompanied with a registered gift deed. Once the immovable property is registered along with a gift deed in your name, you get the legal ownership of the property and right to possession to such property.