Indian Industrial and Logistics Leasing Market to Witness Significant Growth in FY24

The Industrial and Logistics (I&L) leasing market in India saw a year-on-year increase in Q1 2023, according to the latest report by CBRE South Asia. Read on to learn about the top regions driving growth in the Indian I&L Sector and the major players dominating the industry.

The industrial and logistics (I&L) leasing market in India witnessed a year-on-year increase during the January-March 2023 period, according to the latest report by CBRE South Asia.
The report, India Market Monitor Q1 2023, revealed that leasing in the sector reached 8 million square feet (MSF), representing a 26% YoY increase.
Meanwhile, supply during the quarter grew by 28% YoY to reach 7.6 MSF.

The growth in absorption activity was mainly driven by Delhi-NCR, which saw leasing of over 1.7 MSF, followed by Hyderabad with over 1.5 MSF and Ahmedabad with more than 1.2 MSF.
The leasing share of these three cities in total leasing stood at 54%.

Furthermore, Chennai, Kolkata, and Hyderabad collectively contributed 59% of the supply addition during the quarter.

The report also highlighted that Third-Party Logistics (3PL) firms had the majority share in leasing at 43%, while E-commerce Firms' share improved to 15% during the period. Retail, Engineering, and Manufacturing Firms each accounted for around 11%, and Automobile and Ancillary Corporations made up 8%.
Overall, domestic firms held a 61% share of leasing, while American Corporations held a share of around 17%.

Looking ahead, Mr. Anshuman Magazine, Chairman and CEO for India, South-East Asia, the Middle East, and Africa at CBRE, anticipates robust leasing momentum in the I&L sector in 2023, with a demand of 32–35 MSF and growth of 1-5% on an annual basis. The supply is also expected to grow by 15–24% YoY to reach 24–26 MSF.

Major Milestones in the Growth of Industrial and Logistics Leasing Market in India

The industrial and logistics leasing market in India has seen significant growth over the past two years, with several major milestones being achieved.

Here are some of the key highlights:

• In 2021, the Indian logistics sector saw a 35% YoY growth in leasing activity, with demand reaching 52.8 MSF, according to a report by CBRE South Asia.

• In Q4 2021, leasing activity in the Indian industrial and logistics sector reached a record high of 15.2 MSF, representing a 50% YoY increase.

• In 2022, the Indian logistics sector witnessed a 38% YoY increase in investment volume, with over $2 billion being invested in the sector.

• In Q4 2022, the Indian warehousing market saw a record supply addition of 31.9 MSF, according to a report by ANAROCK.

• In 2023, the Indian I&L sector is expected to witness a growth of 1-5% on an annual basis, with a demand of 32–35 MSF and supply growth of 15–24% YoY.

Top Regions Seeing Growth in Indian Industrial and Logistics Leasing

The Indian I&L leasing market is seeing significant growth across various regions, with Delhi-NCR, Hyderabad, and Ahmedabad leading the way.
Other regions driving growth in the sector include Chennai, Kolkata, and Bangalore.
These regions are attracting investment due to their strategic locations and well-developed infrastructure.

Delhi-NCR, being the largest commercial hub of Northern India, has seen considerable growth in the I&L sector due to its proximity to major highways and airports.
Hyderabad, on the other hand, has become a prominent destination for I&L leasing due to its robust IT and manufacturing industries.

Ahmedabad, which is an emerging industrial hub, has seen a rise in demand for I&L spaces due to the government's initiatives to promote manufacturing in the region.

Chennai, which is one of the largest port cities in India, is also emerging as a key player in the I&L sector.
The city's well-developed infrastructure, including the Chennai Port and Chennai International Airport, is attracting investors to the region.
Kolkata, with its strategic location in Eastern India, is also becoming a prominent hub for I&L leasing.

Indian Players in the Industrial and Logistics Leasing Sector

The Indian I&L leasing market is highly fragmented, with a mix of both national and international players.
Some of the major Indian players in the sector include IndoSpace, Ascendas Singbridge, Embassy Industrial Parks, and Hiranandani Group.

These players have been experiencing significant growth in recent years due to the increasing demand for I&L spaces in India.

IndoSpace, which is a joint venture between Everstone Capital and US-based Realterm Global, is one of the largest developers and operators of I&L parks in India.
The company has a portfolio of around 37 million square feet across various regions in India, including Delhi-NCR, Pune, and Chennai.
IndoSpace acquired 56 acres of land in Mumbai to develop a new I&L park.

Ascendas Singbridge, which is a subsidiary of CapitaLand, is another major player in the Indian I&L leasing market.
The company has a portfolio of around 21 million square feet across various regions in India, including Chennai, Hyderabad, and Bangalore.
Ascendas Singbridge acquired a 12.8-acre land parcel in Chennai to develop a new I&L park.

Embassy Industrial Parks, which is a subsidiary of Embassy Group, is one of the fastest-growing players in the Indian I&L leasing market.
The company has a portfolio of around 14 million square feet across various regions in India, including Delhi-NCR, Mumbai, and Bangalore.
Embassy Industrial Parks signed a deal with e-commerce giant Amazon to lease around 1.9 million square feet of space in Delhi-NCR.

Hiranandani Group, which is a leading real estate developer in India, has been expanding its presence in the I&L leasing market in recent years.
The company has a portfolio of around 8 million square feet across various regions in India, including Chennai, Pune, and Mumbai.
Hiranandani Group announced plans to invest around INR 1,000 crore to develop a new I&L park in Chennai.

ThinkWithNiche Final Take on Indian Industrial and Logistics Leasing Market to Witness Significant Growth in FY24: CBRE Report

The Indian I&L leasing market has been witnessing significant growth in recent years, and this trend is expected to continue in the coming years.
The demand for I&L spaces is being driven by the growth of e-commerce and the manufacturing sector in India.
Delhi-NCR, Hyderabad, and Ahmedabad are some of the top regions seeing growth in the sector, while IndoSpace, Ascendas Singbridge, Embassy Industrial Parks, and Hiranandani Group are some of the major players in the Indian I&L leasing market.

These players have been expanding their presence across various regions in India and are well-positioned to capitalize on the growing demand for I&L spaces in the country.