India’s industrial and logistics (I&L) sector is expected to witness strong growth in 2025, driven by increasing demand for warehousing, particularly from e-commerce companies, according to a report by CBRE.
The report highlighted that the sector’s positive momentum, which picked up in the latter half of 2024, will likely continue in the coming year. It said, “This activity is expected to be driven by the influx of investment-grade supply, the finalisation of pending transactions, and the growth in warehousing demand by e-commerce players”. The report attributed this growth to multiple factors, including the availability of high-quality supply, the completion of pending transactions, and rising demand from e-commerce players. The third-party logistics (3PL) sector is expected to remain the largest occupier group, alongside continued leasing demand from the engineering & manufacturing (E&M), e-commerce, and fast-moving consumer goods (FMCG) sectors.
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The report also noted that the institutional investors are expected to play a crucial role in this expansion, with many backing developers to construct modern, sustainable warehouses. These developments will help meet the increasing need for advanced warehousing solutions. Major cities such as Delhi-NCR, Mumbai, Bengaluru, and Chennai are already seeing significant warehouse construction activity, ensuring a strong supply pipeline in 2025.
However, the report also pointed out that some challenges could impact project completion timelines. Factors such as rising land acquisition costs, extended acquisition processes, complicated land ownership structures, and ongoing legal proceedings may delay developments. To counter these hurdles, developers are likely to explore new locations, particularly in peripheral areas and along key infrastructure corridors.
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Investment in India’s I&L sector has seen steady growth, with a compound annual growth rate (CAGR) of 20 per cent from 2019 to 2024. Foreign investors have been the main contributors, accounting for about 68 per cent of the total investment during this period. In 2025, investor sentiment is expected to remain positive, though there may be a more detailed approach to deal execution and due diligence. With strong demand from e-commerce, growing investor confidence, and an increasing supply of modern warehouses, India’s I&L sector is set to maintain its upward trajectory in 2025.