The thriving warehouse construction sector in India in 2023
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The surge in third-party logistics companies, coupled with the rapidly expanding e-commerce market and expanding retail chains, have contributed to the demand for warehouse spaces in India. The trend is projected to further continue in India over the next three to four years, as the need for efficient supply chain management will keep driving investment in the sectors. Over the last few quarters, several new warehouse construction projects have been announced across India.
- Sumadhura Infracon, in May 2023, announced that the firm is planning to build warehouses on 100 acres of land on the outskirts of Bangalore. The project is planned to develop in several phases. In the first phase, the firm is targeting the development of 2.5 million square feet with an investment of INR 6 billion. Overall, the firm has a development plan of 6 million square feet in total, which might also involve an additional acquisition of 150 acres of land. The plan to invest heavily in warehouse construction comes on the back of robust demand for such facilities in the country.
- In March 2023, Mahindra Logistics Ltd. In partnership with Ascendas-Firstspace announced the plan to build a 1 million square feet of warehouse facility in Pune. The development of the project is divided into three phases, wherein the first phase of construction is slated to finish before the fiscal year 2023 – 2024. The first phase of development will cover 0.5 million square feet of construction, while the second phase of construction will span across 40 acres.
- In March 2023, TVS Industrial and Logistics Park announced its ambitious plan to construct 20 million square feet of industrial space by 2027. The company, which currently operates in 11 cities, has a significant presence with 7 million square feet of warehouse space. Going forward, it is planning to have a presence in 30 cities, which also includes cities outside metros and Tier I cities.
The expansion project will enable the firm to better position itself to tap into the growing demand for warehouse spaces all over the country. Notably, the firm provides warehouse spaces to customers across industry verticals. This includes e-commerce, rail transportation, agriculture, machinery, FMCG, and electronics, among others.
Other firms such as Crystal City Developers, Macrotech Developers, and Welspun One have also announced multi-million-dollar investments in developing new warehouse facilities in India.
- Welspun One, in February 2023, announced that the firm is investing INR 20 billion in Uttar Pradesh. The investment will lead to the development of Grade-A warehousing and logistics Park in Lucknow. As part of the project, the firm is planning to build 6 million square feet over the next three to four years.
- Crystal City Developers, in February 2023, announced that the firm is setting up a new warehouse and industrial unit in Gurugram, Haryana. The construction activities on the new facility are projected to start by the fourth quarter of fiscal year 2024. Alongside their warehouse facility, Crystal City Developers is establishing two sewage treatment plants, with a capacity of 540 klpd. The construction project received environmental clearance from SEIAA in 2022.
- Macrotech Developers, in December 2022, also announced that the firm is planning to invest INR 3.3 billion to develop a warehouse facility in Mumbai. The project is planned to accommodate the rising demand for e-commerce and third-party logistic companies in India. The firm had acquired nearly 8 acres of land, which will be used to build 400,000 square feet of Grade-A warehouse facility in Mumbai.
As the demand for warehouse facilities continues to grow across India, ConsTrack360 expects more such projects to be announced by leading developers and warehouse facility providers from the short to medium-term perspective. The investment in these projects will subsequently drive the growth of the commercial construction market in India over the next three to four years.
This, coupled with the growing investment in infrastructure and the residential sector, means that the construction industry is poised to grow at a rapid rate. The Union Minister of Commerce, Piyush Goyal, announced that India is poised to become the third-largest construction market globally over the next two to three years. This aligns well with the growing investment taking place in all of the different construction sectors in India. According to ConsTrack360’s estimates, the market is projected to grow at a compound annual growth rate (CAGR) of 9.9% from 2023 to 2027. The construction output in the country is expected to reach INR 66,954.8 billion by 2027.
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