New Delhi, 20th March 2025: According to Vestian’s latest report, the warehousing & logistics (W&L) sector received investments worth USD 1.96 Bn, accounting for 29% of the total institutional investment garnered in the real estate sector in 2024. Investment inflows surged to 203% year-on-year, driven by the growing demand for warehouses amid the rapid expansion of the quick commerce sector.

Investment Trends

As a result, this surge in demand resulted in a record absorption of 44.9 million sq. ft. in 2024, marking a 19% increase over the previous year. Notably, the second half of 2024 alone witnessed 28.3 million sq. ft. of absorption, a 70% jump compared to H1 2024—the highest ever recorded in a single calendar year.

Mr. Shrinivas Rao, FRICS, CEO, Vestian said, “India’s position as a key logistics hub is set to strengthen on the back of positive investor sentiments, announcements in the Union Budget 2025-26, and robust domestic demand. The government’s continued focus on mega infrastructure projects is expected to further propel growth in the W&L sector. However, limited availability of skilled workforce, regulatory challenges, and land acquisition costs may pose a challenge.”

Majority of the absorption in 2024 was concentrated in 3PL companies, accounting for 33% of the pan-India absorption. However, the share has dropped from 44% a year earlier. This shift underscores the increasing fragmentation of the warehousing market and a growing trend among large conglomerates to establish greater control over their logistics operations. Conversely, the share of engineering and manufacturing sector increased from 18% in 2023 to 24% in 2024, propelled by various government initiatives such as ‘Production Linked Incentive (PLI)’ scheme and ‘Make in India’ campaign.

City-wise Analysis

• Mumbai reported the highest absorption of 18.6 Mn sq ft in 2024 as it grew by 82% compared to the previous year. The significant rise in absorption could be attributed to improved intercity connectivity through Navi Mumbai airport and the rise of quick commerce in major tier-1 cities.
• Pune’s absorption increased by 85%, the highest rise amongst the top seven cities, reporting 13 Mn sq ft absorption in 2024. Average rentals depreciated by 3% in the city to INR 22.9/sq ft/month.
• Chennai, Hyderabad, and Kolkata accounted for 15% of the pan-India absorption during 2024, indicating a decline from 22% a year ago.
• NCR registered the highest decline of 55% in absorption among the top seven cities in 2024. As a result, the share of NCR in the pan-India absorption declined from 23% in 2023 to a mere 9% in 2024.
• Chennai holds the highest rentals of INR 24.2/sq ft/month in 2024, registering an annual appreciation of 11%. Limited availability of land within the city peripheries pushed the rentals northwards.
• Mumbai has emerged as the most affordable warehousing market in 2024 with an average rental of INR 18.1/sq ft/month.