Exploring India’s real estate and logistics landscape

We prioritise nationwide industrial and warehousing development, recognising local landlords’ expertise as crucial for project sustainability.

Abhijit Verma, Founder and Managing Director, Avinya Industrial and Logistic Parks, assesses India’s industrial real estate sector, which is currently flourishing due to initiatives like Make in India, the Performance-Linked Incentive (PLI) scheme, and the GST, driven by e-commerce growth.

Our focus in on empowering small and medium landowners to become Grade A warehouse developers, aligning with industry demands

In Q1 2023, 11 million square feet of space were absorbed, with 77 percent from Tier I cities and 23 percent from Tier II and III cities, per Savills India. Challenges include land shortages and insufficient micro, small, and medium warehousing.

Avinya leads the way in empowering small landowners to become Grade A developers, addressing these issues. Expanding warehousing infrastructure beyond top cities is crucial to helping India reach its $5 trillion economy goal.

The surging demand for e-commerce and logistics services drives remarkable growth in the regional warehousing market, making it undeniably an attractive real estate asset class. ICRA projects a robust CAGR of 10.5 percent until 2025, underpinning its emergence as the fastest-growing segment within the real estate industry.

India’s high logistics costs, currently comprising 13–17 percent of GDP, are poised for reduction with the anticipated growth of the warehousing sector, enhancing overall economic efficiency.

Looking ahead, the near-term outlook for warehousing is highly promising, with increasing demand for warehousing spaces, including dark stores and direct-to-consumer brands in the e-commerce industry. These factors, combined with the sector’s potential to underpin a $5 trillion economy, reflect its strong fundamentals and substantial growth potential.

The government’s role is pivotal in sustaining this growth. Actively managing input costs and providing support to the warehousing sector will enhance stakeholder motivation, create an environment conducive to further development, and ultimately contribute to India’s economic growth story.

In the evolving business landscape, warehouses and logistics centres are no longer just storage spaces; they’re vital for managing complex supply chains and expanding inventory capacities. To overcome supply chain challenges, especially in sales logistics, companies must embrace cutting-edge technologies like conveyor belts, ASRS, and robotic packaging.

Automation streamlines tasks and accelerates shipment processing, while maintaining optimal inventory levels is crucial for cost management. Leveraging data analytics to track shipments and gain consumer insights can further optimise the supply chain, ensuring faster deliveries and improved efficiency in the era of rising e-commerce demand.

In the booming e-commerce and 3PL markets, Grade A warehousing properties are in high demand. Their well-fitted infrastructure and minimal risk make them essential for supply chain optimisation, comprising over half of Grade A transactions.

Our company focuses on developing cutting-edge Grade A warehousing properties, empowering landlords to attract investments from various sectors. Rising rents and the need for top-quality properties make Grade A warehousing a cost-saving investment that enhances long-term operational efficiency. We stay ahead in meeting evolving business needs, leveraging our expertise in this dynamic market.

At Avinya, we see immense potential in the emerging Indian market, positioning ourselves as pioneers in unlocking vast land parcels to empower businesses nationwide. Our focus is on industrial and warehousing development across the country. We stand out by recognising the local landlords’ expertise, vital for project sustainability.

We aim to empower them to become Grade A developers, providing business acumen, client connections, and asset optimisation guidance.

As a testament to our confidence in the sector, we’re developing an industrial and logistics park in Hosur, set to create numerous employment and entrepreneurship opportunities. Despite increasing competition, we remain committed to unleashing India’s potential and fostering sustainable growth.

In India’s evolving warehousing landscape, significant transformations are evident, from large-scale logistics parks to smaller urban dark stores. Our focus is on empowering small and medium landowners to become Grade A warehouse developers, aligning with industry demands.

As the sector grows and achieves scale with more Grade A properties, the potential for Real Estate Investment Trusts (REITs) becomes apparent. Maintaining favourable unit economics is crucial to attracting institutional investors.

Consequently, REITs could offer a viable avenue for retail investors to participate in this burgeoning sector, expanding horizons for the warehousing industry in the next two to three years.

Our organisation envisions a transformative shift towards generating superior risk-adjusted returns. We commit to grassroots initiatives, empowering landlords to become Grade A developers. We forge partnerships to contribute to sector growth. Governments provide vital enablers, but the industry must seize these opportunities for long-term financial sustainability, capital liquidity, and seamless investment flow.