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India’s warehousing and logistics sector attracts $2.5 billion in Q2 2024, led by foreign investors

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NEW DELHI : As India aspires to energise its land bank to scale up the efforts for boosting the manufacturing and services economy, warehousing and logistics have become a newfound love, attracting foreign investors the most.

According to a recent report by Colliers India, a real estate research and brokerage firm, the second quarter of 2024 saw a surge in momentum following a steady start to the year.

The quarter registered $2.5 billion in inflows, marking the highest quarterly figure since 2021. The industrial and warehousing sector led the charge, accounting for 61% of total investments with $1.5 billion, driven by several large deals. The residential sector also experienced a notable increase, with quarterly inflows rising 7.5 times compared to Q2 2023, capturing 21% of total institutional inflows into Indian real estate.

In contrast, the office assets segment saw subdued activity, with investments totaling $0.3 billion in Q2 2024. This represented a significant annual decline of 83%, though the quarter-on-quarter drop was a more modest 41%. Despite the slow start in the first quarter, the combined surge in industrial, warehousing, and residential investments resulted in a healthy investment volume of $3.5 billion for the first half of 2024.

Foreign investments remained strong, comprising 81% of total inflows in Q2 2024, primarily driven by investors from the US and UAE.

Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India says, “With foreign investments leading the charge at a significant 73% share in H1 2024, the sustained momentum is expected to drive positive sentiment for the entire year. Sustained growth in FDI and Domestic Capital in India Real Estate reciprocates the attractiveness and the positive long-term outlook for infrastructure, construction, and real estate in India. The domestic institutional and retail investor activity in Indian real estate is also expected to remain strong in the second half of the year, driven by healthy economic activity and consumer confidence.”

Industrial & warehousing segment surged to 11 times

According to the report, during Q2 2024, the institutional investments in the industrial and warehousing segment rose manifold,  as much as 11X times compared to Q2 2023 led by select large deals in the segment.

“Amidst rising demand for superior quality Grade A supply and evolving supply-chain models, investor confidence in the segment has significantly improved. With healthy demand momentum, global as well as domestic investors are going to play a prominent role in the consolidation of industrial & warehousing assets in the country. Amidst significant spurt in E-commerce and retail consumption in India, various asset-level investors are likely to enter the market, boosting the demand for AI-enabled warehouses and micro-fulfilment centres in the upcoming quarters,” the report said.

From 15-minute deliveries of daily needs to the increasing reach of e-commerce, people across India, including those in remote villages near Ladakh, can now order apparel, shoes, and more from metro-based stock. This is made possible by the country’s expanding warehousing and logistics facilities.

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