What is driving industrial and warehousing demand?

Indian industrial and warehousing sector witnessed an investment inflow of INR254 billion, which is likely to touch INR495 billion by 2021

In the past, the Indian industrial and warehousing sector has been characterized by fragmented sheds and godowns. However, led by demand for larger facilities from e-commerce companies, the sector is becoming more organized. Transformation is brought about by government initiatives, global trade dynamics, an influx of technology and evolving consumption patterns. Occupier preferences are changing and investor interest is increasing.

“Occupiers mulling large contiguous warehouse leases, especially in the e-commerce and 3PL sectors, should look at select micromarkets in Mumbai and Pune that offer a good mix of industrial and multi-purpose warehouses. Bengaluru should also be explored as it offers seamless transfer of goods between states, benefitting from the removal of state-level taxes”, said Sankey Prasad, MD & chairman at Colliers International India.

The industrial and warehousing sector in India has attracted significant investor interest since 2017 led by robust demand from e-commerce and other consumer-led occupiers. As per Colliers Research, the sector has attracted interest from multiple large institutional investors since 2017, with investment inflows of INR254 billion (USD3.6 billion), signifying a large pool of capital available for investment in this sector. We project the investment inflow is likely to touch INR495 billion (USD7 billion) by 2021 as existing participants expand their portfolio and new players enter the market.

Factors driving industrial and warehousing demand

The Indian industrial and warehousing sector is benefiting from government policy initiatives such as the Goods and Services Tax (GST) implementation and Make in India program, as well as global trade dynamics and evolving consumption patterns. The initiatives augmented growth and private sector participation in a sector which was not well-regulated.