Mumbai Continues to Thrive as a Major Industrial and Logistics Hub of South Asia

India’s largest metropolitan and the world’s fifth most populous city, Mumbai is known as the commercial and financial capital of India. The city houses two stock exchanges that account for most of the securities trading in the country. With the busiest airport in India and two large seaports, Mumbai contributes over half of India’s foreign trade, generating over 5% of India’s GDP and one-third of country’s tax revenues.

Home to the flourishing media and film industry, the city also serves as the entertainment capital of the country. Its economic base has diversified from being dominated by textile mills and the seaport to Banking and Financial Services Industry (BFSI), engineering, services, and Information Technology and Enabled Services (IT & ITeS) sectors.

Already boasting a large infrastructure setup comprising numerous expressways and intra-city railway networks, several landmark projects are in the pipeline, including the Mumbai Metro Rail Project, Navi Mumbai International Airport and the Mumbai Monorail Project. Along with accommodating the busiest airport of India, the city’s natural harbor now has two seaports Mumbai port and JNPT port, together with handling 17.3% of the country’s total cargo in 2019-20, thereby continuing its position as one of the major industrial and logistics hubs in South Asia.

The Mumbai Metropolitan Region (MMR) has operational industrial and warehousing stock of 40.4 million sq. ft as of 2020, the second-highest in the country. The city has seen robust activity in recent years with the absorption rate peaking at 5.3 million sq. ft in 2019. 

In 2020, the city witnessed the absorption of 3.5 million sq ft of industrial and warehousing space. Bhiwandi sub-market accounted for around 85% of the total absorption during the same period followed by Navi Mumbai at 15%. Increasing e-commerce platforms, expanding 3PL sector, greater implementation of technology are major growth drivers for warehousing sector. The 3rd party logistics (3PL) sector accounted for 68% of total absorption witnessed in 2020, followed by e-Commerce (26%) and manufacturing (6%). 

On the supply side, Mumbai witnessed 2.4 million sq. ft of supply in 2020 mainly in Bhiwandi sub-market. The overall vacancy levels reduced from 7.1% in 2019 to 4.0% in 2020, and the rental values remained stable in 2020 across major micro-markets of the city.

Locations such as Bhiwandi and Panvel are driving warehousing demand in Mumbai as these locations are home to many warehousing players.  Thane-Belapur Road, Taloja, and Ambernath are emerging as the preferred destinations for manufacturing developments. The Navi Mumbai region is likely to witness increased activity owing to the upcoming international airport and the Mumbai trans harbor link (MTHL).

We foresee that 3PL, e-Commerce, and increased demand for in-city warehousing are likely to drive warehousing demand in Mumbai in 2021 with a total absorption of 7.8 million sq. ft of industrial and warehousing space. The vacancy level is expected to reduce marginally to 3.7% in 2021 from 4.0% in 2020. The rental and land values are expected to remain stable in 2021 and likely to appreciate marginally in 2022.