India is poised to experience a significant boom in its industrial real estate sector, driven by a confluence of factors including government policies, infrastructure development, the e-commerce explosion, and shifting global supply chains. Experts predict a continued surge in demand, with an average annual requirement of 30-40 million square feet.
Key Growth Drivers
Several factors are propelling the industrial realty boom such as the "China+1" strategy, where global businesses are actively seeking manufacturing alternatives to China, and India has emerged as a prime destination for foreign investments. This shift is particularly evident in sectors like electronics, automotive, and pharmaceuticals, which are increasingly looking to India for production, thereby driving demand for industrial spaces. The explosive growth of e-commerce in India has also intensified the demand for logistics and warehousing spaces. Quick commerce, with its focus on hyper-local, same-day deliveries, is further fueling the need for faster, smaller warehouses in urban locations.
Government initiatives are playing a crucial role through infrastructure development projects like Bharatmala Pariyojana which enhances connectivity between major industrial hubs and ports, reducing logistics costs, Sagarmala Project which focuses on port-led development, streamlining trade routes and improving port connectivity, and Dedicated Freight Corridors (DFCs) which are rail corridors being developed to speed up freight transportation. The government has allocated ₹2,500 crores in the Union Budget 2025-26 for the development of plug-and-play industrial parks designed to enhance operational efficiency and sustainability. Government initiatives to develop infrastructure, such as industrial corridors, smart cities, and special economic zones, have increased the demand for commercial real estate.
Leasing Trends and Investment
The industrial and logistics space leasing in India rose 19% to a record 76.5 million sq ft in 2025, led by manufacturing and logistics firms. The manufacturing sector leased 29% of the spaces, followed by third-party logistics firms at 28%, and e-commerce companies at 12%. Institutional investments in the Indian real estate market reached a remarkable $10.4 billion in 2025, a 17% increase from 2024. In 2024, the industrial and warehousing segment accounted for the highest share in overall real estate investment volumes at 39%, surpassing the office segment.
Regional Hotspots
Leading markets such as Delhi NCR, Bengaluru, and Hyderabad, account for nearly 60% of total industrial and logistics absorption, benefiting from strong infrastructure, proximity to consumption centers, and deep occupier ecosystems. Tier-I cities like Ahmedabad, Chennai, Kolkata, and Pune have also witnessed substantial growth in leasing. Leasing activities in tier-II and tier-III cities are also on the rise. Pune and Chennai emerged as dominant markets among India's eight Tier I cities for manufacturing leasing activity, collectively accounting for 75% of total demand for manufacturing leasing spaces. Delhi-NCR remained the best performer, leasing 13 million square feet this year.
Future Outlook
India's industrial real estate sector is poised for continued growth, with projections indicating that both supply and absorption of industrial and logistics spaces will surpass 80 million sq ft in the upcoming year. Manufacturing leasing demand is forecasted to reach 34 million sq. ft by 2027 in the top 8 cities, representing 46% of India's total industrial and warehousing absorption. This growth is supported by government incentives for advanced manufacturing clusters. Demand for Grade A facilities is also on the rise, reflecting the increasing requirements for customized, high-specification buildings. The real estate demand for data centers will increase by 15-18 million sq. ft. by 2025.
However, sustained growth will depend on overcoming challenges such as regulatory bottlenecks and ensuring continued policy support. By leveraging these trends and addressing the existing challenges, India is on track to become a significant player in the global industrial real estate market.
