Warehousing demand up strongly 45% q-o-q

• In Q2 2024, warehousing demand rose by 45% q-o-q, with net absorption of 1.37 million sq ft & gross absorption of 2.62 million sq ft. Delhi – NH8 led among submarkets in terms of absorption, followed by Faridabad – Palwal and Ghaziabad – Noida.
• Logistics/3PL drove the robust demand, accounting for a 50% share followed by Electronics, FMCG, Engineering & E-Commerce. Occupiers prefer high-quality & compliant spaces, pushing the demand for Grade A warehouses to over 90% of absorption.

Warehousing market records 75% y-o-y growth in supply

• The warehousing market witnessed supply additions of 2.50 million sq ft in Q2, marking a 75% y-o-y growth. Delhi-NH8 witnessed the highest influx of new supply, followed by Faridabad – Palwal and Ghaziabad – Noida.
• Vacancy slightly rose to 18.8% in Q2 2024 due to the addition of new supply as compared to demand. With an increase in speculative Grade A supply, vacancy in Grade A stock rose slightly by 150 bps q-o-q to 7.3%, much lower than the overall number.

Rising demand and institutional investments drive 7.2% y-o-y surge in rents

• Surge in Prime Grade A warehousing demand, increased traction of institutional investments, and increasing land rates have led to a significant 7.2% y-o-y surge in the rents of NCR Delhi.
• The upward trajectory is predicted to continue due to increased investments from institutional developers and investors such as Indospace, Horizon Industrial Parks, LOGOS, Ascendas, Welspun, and ESR.

Outlook: NCR warehousing sector to expand with investor traction and infrastructure development

• NCR’s warehousing stock is set to reach 98 million sq ft by 2024. Grade A projects, backed by investors such as Indospace, Ascendas, Blackstone, Welspun, and ESR, will drive growth. Delhi – NH8 submarket is likely to remain the most active corridor.
• Proposed infrastructure projects, including freight corridors such as DMIC, WDFC, and EDFC will support connectivity enhancement and positively impact warehousing demand in the market. Vacancy is likely to remain below 15% over the next four years.