Warehousing supply across 8 primary markets likely to grow 13-15% in FY24, says ICRA
ICRA. The incremental absorption is estimated to remain at around 39 million sq ft, the level witnessed in 2022-23. Nearly 52% of the expected supply addition across these primary markets including Mumbai, National Capital Region, Pune, Chennai, Bengaluru, Kolkata, Hyderabad, and Ahmedabad will be in grade A category.
The warehousing sector continues to witness a sustained demand from the third-party logistics (3PL) and automobile sectors, which together accounted for nearly 53% of the total leased warehousing area in the rating agency’s sample of as on March 2023. ICRA rated-portfolio Includes 112 warehouses and industrial parks across 16 cities and regions with total leasable area of around 34 million sq ft. Additionally, the rapid expansion of new-age sectors like e-commerce and allied services, growing needs of the massive consumption market, and the government’s focus on Make-in-India and the PLI schemes promoting manufacturing have further bolstered warehousing demand.
The credit profile of warehousing operators is expected to remain stable. “Over 30% of the current Grade A stock in India is backed by the global operators /investors such as CPPIB, GLP, Blackstone, ESR, Allianz, GIC, and CDC Group etc. The long-term growth prospects for the Grade-A warehouses are supported by the increasing focus of the end-user industries on improving operational efficiencies,” said Tushar Bharambe, Assistant Vice President and Sector Head, ICRA.
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