Warehousing construction cost surges by 6.7% in India

Construction costs in India have surged by 3.4% to 6.7% for general manufacturing and 4.8% to 6.7% for Grade-A warehousing between H1 2020 and H1 2024, according to Savills India, a global real estate advisory firm.

Among cities, Kolkata recorded the highest escalation for general manufacturing costs at 6.7%, followed closely by Chennai (6.5%). For Grade-A Warehousing, Chennai led the surge with a 6.7% increase, with Bengaluru and Hyderabad each witnessing a 6.0% rise.

This increase can be attributed to the rise in the prices of crude oil, steel, aluminium, cement, labour, equipment rentals and costs of plumbing and fixtures.

“The manufacturing and warehousing sectors are experiencing substantial construction, driven by increasing market demand, supportive government policies, growth in the FMCG & FMCD, electronics, apparel, EV and associated sectors. This dynamic environment is setting the stage for robust growth as new facilities are developed to meet the evolving needs of the industry,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.

“The changing occupier preferences to meet ESG (Environmental, Social, and Governance) standards are likely to leading to increased demand for sustainable and energy-efficient buildings, driving the adoption of green construction practices in industrial and warehousing sectors,” the executive said.

India’s rapid urbanization, robust infrastructure development, and economic growth have collectively driven significant demand, boosting construction activity in the industrial and logistics sector. Supply is projected to surpass 60 million sq. ft. annually over the next 3-4 years. Despite rising costs, India remains cost-competitive, with construction expenses for manufacturing and warehousing substantially lower than in developed nations like the USA, UK, France, and Germany, owing to affordable labor and relatively lower material costs.“In the current economic upswing, India’s logistics and warehousing industry is on the brink of a remarkable transformation. Additionally, India is emerging as a global manufacturing hotspot. Naturally, the demand for manufacturing and warehousing facilities is expected to surge in the coming years,” said Sumit Rakshit, Managing Director, Project Management Services, Savills India.

“We expect construction costs for industrial and warehousing projects to increase marginally over the next 3-4 years. The magnitude of growth is dependent on material costs, labour, equipment rental costs, interest rates and other related costs. However, India offers very significant cost arbitrage, compared to the developed economies,” Rakshit said.

Nominations for ET MSME Awards are now open. The last day to apply is November 30, 2024. Click here to submit your entry for any one or more of the 22 categories and stand a chance to win a prestigious award.



_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}