The Logistics Sector's Strength

India's GDP grew by 8.2% in FY24. And its logistics sector serves as both: a reflection and a driver of this growth.

So how does the logistics sector hold up? A recent report by Savills provides valuable insights into the logistics market's performance:

Supply and Demand Dynamics:

▶ Supply grew by 2.9% year-over-year, reaching 28.2 million sq. ft. in H1 2024.

▶ Absorption surged by 21.9%, totaling 27.3 million sq. ft., with Tier-I cities leading the charge.

This healthy balance between supply and demand underscores the sector's vitality and its ability to meet the growing needs of India's expanding economy.

Sector-Specific Trends (absorption):

▶ 33%: Third-Party Logistics (3PL)

▶ 22% Manufacturing

▶ 17%: Fast-Moving Consumer Goods (FMCG) and Fast-Moving Consumer Durables (FMCD)

These figures highlight the diverse drivers of logistics demand, from e-commerce fulfillment to industrial growth.

Several factors contribute to this:

▶ Government initiatives and foreign direct investment (FDI) policies are enhancing infrastructure and attracting investments.

▶ The e-commerce landscape is expanding its urban distribution networks.

▶ A growing focus on Grade-A warehousing (driven by ESG standards) is elevating the quality of logistics infrastructure. In H1 2024, Grade-A space accounted for 49% of supply and 39% of absorption.

The robust demand, particularly from manufacturing and 3PL segments, underscores the growing importance of India as a global market and production hub. As the logistics backbone strengthens, it can pave the way for further economic diversification and integration into global supply chains.

What are your impressions?

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Sources: Savills Logistics Report

Link to original LinkedIn Post.

India, Real Estate, Manufacturing, Industrial, Logistics