21 percent higher absorption in 2022
Vestian report reveals
The warehousing and logistics sector saw a 21% increase in absorption in 2023, with investments worth $646 million accounting for 15% of total institutional real estate investments. Despite a decrease in investments last year, the sector’s absorption remains 15% higher than pre-Covid era levels. However, investments in 2023 are down 65% due to global financial uncertainty. Despite this, demand for 3PL companies has increased due to their flexibility and cost optimisation, making them the preferred choice for investors.
- In 2023, 3PL accounted for 44% of total absorption, followed by engineering and manufacturing companies at 18% and retail at 11%. Mumbai leads with 27% in warehousing and logistics, up from 19% in 2022. Kolkata recorded the highest annual decline at 23%, reaching 1.6 million square feet. Delhi-NCR experienced a 21% increase in absorption in 2023, while Hyderabad, Bengaluru, and Chennai accounted for 34% in 2022. The southern cities of Hyderabad, Bengaluru, and Chennai accounted for 34% in 2022, but decreased to 27% in 2023.
- Vestian CEO Srinivasa Rao opined that the announcements related to the development of infrastructure in the interim budget introduced by the Centre are likely to have a positive impact on this sector. 2024 will be a challenge for the Indian warehousing sector as investments are reduced in 2023. It is expected that this sector will expand at 10 to 13 CAGR for the next two years through third-party logistics and e-commerce enterprises.
