A Measured Outlook for India’s Warehousing Sector

India’s warehousing sector saw accelerated growth during the last decade, largely driven by the rapid expansion of e-commerce. The scale and speed of consumption and distribution needs between 2015 and 2022 pushed up demand for modern, well-located logistics infrastructure. During this period, warehousing emerged as a distinct and maturing real estate sub-asset class, drawing attention from both domestic and global investors.

Private equity flows reflect this trajectory. In 2024, private equity investments in Indian real estate totalled $4.2 billion, up 32% from the previous year, according to Knight Frank India. Warehousing accounted for 45% of these investments, surpassing the office segment, which had dominated PE interest since 2017. The category now attracts a stable pipeline of institutional capital, increasingly routed through platforms and InvIT structures.

This transition from opportunistic capital to programmatic capital has reshaped how warehousing assets are financed and scaled. Several global LPs are now participating not just in one-off transactions, but in warehousing-specific platforms – either alongside developers or through logistics-focused InvITs. This is slowly institutionalising the sector’s capital stack.

As the e-commerce sector matures, the warehousing sector’s growth trajectory is beginning to normalise. Industry estimates suggest that the segment is now expected to grow at a more stable 7–10% annually. Investors appear to be adjusting accordingly, shifting from broad-based participation to a more selective approach focused on quality, location, and operational sophistication.

This adjustment doesn’t suggest a loss of interest. Instead, it signals a shift in capital discipline. Where earlier growth was driven by macro tailwinds, today’s decisions are increasingly informed by micromarket-level economics, tenant retention metrics, and operating leverage.

This has translated into a preference for grade A warehousing in core metro and tier-1 regions. Over the last five years, grade A warehouse stock across India’s eight primary markets has grown at a CAGR of 21%, reaching 183 million sq. ft. by FY24, according to ICRA. More than half of this stock is backed by global institutional capital, including investors such as Blackstone and the Canada Pension Plan Investment Board. These investors typically prioritize stable yield profiles, tenancy quality, and ESG-compliant infrastructure.

Grade A assets are particularly attractive for their operational resilience and leasing velocity. With higher floor loads, wider turning radii, better insulation, and green certifications, these warehouses are purpose-built for long-term occupancy and multi-client use cases. This allows developers and platform operators to underwrite tenancy pipelines more predictably, especially for FMCG and e-commerce tenants.

Even with a more measured growth outlook, capital interest in warehousing remains active. In March 2025, NDR InvIT Trust acquired a 900,000 sq. ft. warehouse and industrial park in Surat. Earlier in the year, the same trust had announced a ₹706 crore plan to acquire fully leased warehouses across Surat, Pune, Bengaluru, and Hyderabad. In September 2024, Macrotech Developers (Lodha Group) consolidated its warehousing exposure by buying out Ivanhoe Warehousing India Inc.’s stake in three joint ventures for ₹239.5 crore.

These transactions reinforce a key point: warehousing is now an active part of developers’ and investors’ core strategies, not a peripheral or cyclical bet. What used to be built on spec or as sidecar industrial projects is now being master-planned with long-term capital commitments and dedicated exit paths, often via REITs or InvITs.

Additionally, many domestic players are exploring REIT-eligible warehousing portfolios, focusing on relevant and critical factors to position themselves for eventual listings or anchor exits.

The broader trend suggests that warehousing has moved from a thematic bet linked to e-commerce expansion to a more durable real estate allocation anchored in income generation, scale, and long-term tenancy. While the period of exponential expansion may be behind, the sector now offers a combination of predictability, asset quality, and institutional entry points that align with the current preferences of many long-term investors.

Warehousing also sits at the intersection of several macro tailwinds, including India’s manufacturing push, the China+1 narrative, improved highway connectivity, and formalisation of supply chains across retail, pharma, and perishables. These drivers create durable, sector-wide demand even beyond the core e-commerce story.

For long-term investors, this sector presents an opportunity to deploy capital in yield-generating real assets with stable occupancy, inflation-linked rent escalations, and upside from future lease renegotiations or tenant expansion. That makes warehousing particularly well-suited for pension, sovereign, and insurance capital that values asset-backed visibility and downside protection.

The road ahead will likely see further segmentation within the warehousing theme, between urban last-mile, cold-chain facilities, multi-client logistics parks, and fully integrated industrial townships. Each sub-segment will require distinct underwriting models, and the capital will likely bifurcate between high-yield mid-market plays and low-yield, institutional-grade assets.

In this next phase, success will not come from being early, but from being precise on location, tenancy, design, and funding structure. As warehousing settles into a steadier rhythm, the edge will lie in operational control, tenant stickiness, and scale efficiency.

For context on why capital is shifting into infrastructure and logistics, see The Expansion of Private Credit and Real Alpha Isn’t in the Market – It’s in the Manager.

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