India’s Logistics and Industrial Sector Grows in 2024: JLL Report
India’s logistics and industrial sector has shown remarkable growth in the first half of 2024, highlighting its resilience and relevance in the current market, according to a report by real estate firm JLL.
Rent Increases in Major Cities
Major cities like Mumbai, Delhi NCR, Bengaluru, Kolkata, Chennai, Hyderabad, Ahmedabad, and Pune saw significant year-on-year rent increases of 4.8% for Grade A properties and 6.4% for Grade B properties.
Vacancies and Absorption
Grade A properties had a vacancy rate of 6.6% in H1 2024, while Grade B properties had a 15.4% vacancy rate. The gross absorption in the top eight cities amounted to approximately 24.2 million sq. ft., with Grade A properties contributing 70% and Grade B properties contributing 30%.
Supply and Future Projections
The total supply of industrial properties now stands at 393 million sq ft, with expectations to reach approximately 595 million sq ft by 2027. Organized Grade A warehousing supply stood at 204 million sq. ft, surpassing the Grade B supply of 189 million sq ft.
Demand Drivers
The third-party logistics (3PL) sector remained the largest demand driver with a 38% share of gross absorption, followed by the auto and engineering sector at 23%, and the FMCG, FMCD, and retail sectors contributing 20%.
Growth Factors
The growth drivers for the country’s warehousing sector include the rise of quick commerce, the National Logistics Policy, increased e-commerce penetration into Tier I and II/III cities, and the outsourcing of warehouse space to 3PL.
ESG Considerations
Grade A warehousing is gaining traction due to lower rents and higher efficiency per pallet positions compared to Grade B properties. The industry also places increasing emphasis on ESG (Environmental, Social, and Governance) considerations, with sustainability practices being implemented in construction and operations.
Doubts Revealed
JLL -: JLL stands for Jones Lang LaSalle, a company that provides real estate services and investment management. They help people buy, sell, and manage properties.
Logistics -: Logistics is the process of planning and managing the movement of goods from one place to another. It includes transportation, storage, and delivery.
Industrial Sector -: The industrial sector includes businesses that produce goods in factories. This can be anything from cars to clothes to electronics.
Grade A and B properties -: Grade A properties are high-quality buildings with modern facilities, while Grade B properties are older and may not have the latest features. Both are used for business purposes.
Quick commerce -: Quick commerce refers to the fast delivery of goods, often within a few hours of ordering. It’s like getting your online shopping very quickly.
National Logistics Policy -: The National Logistics Policy is a plan by the Indian government to improve the transportation and storage of goods across the country. It aims to make logistics more efficient and cost-effective.
E-commerce -: E-commerce is buying and selling goods or services over the internet. Websites like Amazon and Flipkart are examples of e-commerce platforms.
3PL sector -: 3PL stands for Third-Party Logistics. These are companies that provide logistics services to other businesses, like warehousing and transportation.
Auto sector -: The auto sector includes companies that make and sell vehicles like cars, trucks, and motorcycles.
Engineering sector -: The engineering sector involves companies that design and build machines, structures, and other products. Engineers work in this sector to create new technologies.
FMCG -: FMCG stands for Fast-Moving Consumer Goods. These are products that sell quickly and are used every day, like food, drinks, and toiletries.
FMCD -: FMCD stands for Fast-Moving Consumer Durables. These are products that last a long time, like appliances, electronics, and furniture.
Retail sector -: The retail sector includes businesses that sell products directly to consumers, like shops and online stores.
Mumbai -: Mumbai is a big city in India, known as the financial capital of the country. It’s located on the west coast.
Delhi NCR -: Delhi NCR stands for Delhi National Capital Region. It includes Delhi and nearby cities like Gurgaon and Noida.
Bengaluru -: Bengaluru, also known as Bangalore, is a major city in India. It’s known for its tech industry and is often called the ‘Silicon Valley of India.’
