India's Warehousing Boom: Rs 4 Lakh Crore Growth Ahead

India's warehousing sector is experiencing a significant boom, with the market anticipated to grow from Rs 2.5 lakh crore to Rs 4 lakh crore by 2031, representing an 8.5% compound annual growth rate. This expansion is driven by a shift in demand beyond traditional consumption, with organized retail, e-commerce, and manufacturing sectors fueling the need for Grade A spaces and integrated industrial and logistics ecosystems.

Several key players are scaling rapidly. TVS ILP plans to commit Rs 2,500-2,700 crore over three years to grow its portfolio to nearly 20 million sq ft by 2028. Welspun One aims for over 10 million sq ft of additional leasing, backed by a 13 million sq ft development pipeline. Logicap Advisors has grown to 25 million sq ft in nearly four years and is seeking Rs 1,500-1,900 crore in equity.

Despite the growth, challenges exist. Land availability in desired locations and varying state approval processes can impact project timelines. Furthermore, increased investor activity has compressed returns, with yields on operational properties falling from 8.5-9% to 6.5-7%. For development assets, yield on cost has dropped from 11.5-12% to 9-9.5% as land prices have surged.

Developers remain optimistic, viewing the current squeeze within the context of India's emerging role as a global manufacturing and supply-chain hub. This structural demand for logistics infrastructure is expected to persist as more companies establish operations. Annual leasing is projected to hit 60 million sq ft in 2026, with rents expected to rise 4-6% annually, although sustaining this pace is crucial for developer investments.