Warehousing continues to hold smart money

For investors in India's real estate market, it isn't just office properties and residential developments that are vying for their money but also the more timid warehousing space.

- Dipti Sharma & Mansi Verma

MUMBAI:

Warehouses emerged as a key investment segment in the past 4-5 years, driven by strong demand from logistics, e-commerce, manufacturing and retail occupiers. However, investors are becoming increasingly selective now, prioritizing grade A assets in top-tier cities and favouring tech-enabled and environmentally sustainable warehouses, according to industry participants.

Grade A warehouse stock across India's eight primary markets grew at a compound annual growth rate of 21% over the past five years, reaching 183 million sq. ft in 2023-24, credit rating agency Icra said in a July 2024 note.

More than 50-55% of this stock is backed by global investors such as US private equity firm Blackstone, Canada Pension Plan Investment Board, Singapore's sovereign wealth fund GIC, Singapore-headquartered GLP and Hong Kong-based ESR Group. But this phase of high returns may be over as India's warehousing sector enters a period of more normalized and stable performance, according to industry experts.