According to Vestian’s latest report, the warehousing & logistics (W&L) sector received investments worth $ 1.96 billion, accounting for 29 per cent of the total institutional investment garnered in the real estate sector in 2024. Investment inflows surged to 203 per cent year-on-year, driven by the growing demand for warehouses amid the rapid expansion of the quick commerce sector.

Investment trends

Source: Vestian Research

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

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.”

Source: Vestian Research

Majority of the absorption in 2024 was concentrated in 3PL companies, accounting for 33 per cent of the pan-India absorption. However, the share has dropped from 44 per cent 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 per cent in 2023 to 24 per cent in 2024, propelled by various government initiatives such as ‘Production Linked Incentive (PLI)’ scheme and ‘Make in India’ campaign.

Sector-wise absorption

Source: Vestian Research

City-wise analysis

?        Mumbai reported the highest absorption of 18.6 million sq ft in 2024 as it grew by 82 per cent 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 per cent, the highest rise amongst the top seven cities, reporting 13 million sq ft absorption in 2024. Average rentals depreciated by 3 per cent in the city to Rs 22.9/sq ft/month.

?        Chennai, Hyderabad, and Kolkata accounted for 15 per cent of the pan-India absorption during 2024, indicating a decline from 22 per cent a year ago.

?        NCR registered the highest decline of 55 per cent in absorption among the top seven cities in 2024. As a result, the share of NCR in the pan-India absorption declined from 23 per cent in 2023 to a mere 9 per cent in 2024.

?        Chennai holds the highest rentals of Rs 24.2/sq ft/month in 2024, registering an annual appreciation of 11 per cent. 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 Rs 18.1/sq ft/month.

City-wise share in absorption

Source: Vestian Research