New Delhi, Aug 1 (IANS): The Indian warehousing sector received investments worth $1.6 billion in the January-June period, accounting for 42 per cent of the total institutional investment received in the real estate sector in the same timeframe, a report showed on Thursday.

As major economies of the world started expanding again and the participation of foreign investors increased in the Indian warehousing sector, investments in H1 2024 were equal to one-third of the total institutional investment received in the past four years.

Moreover, investments increased by 4.5 times in H1 2024 compared to H1 2023, according to a Vestian report.

"Recent government announcements to boost infrastructure developments are likely to reduce logistics costs from 8-9 per cent to 5-6 per cent of the GDP, which, in turn. will lead to an increase in real estate activities in the warehousing sector," said Shrinivas Rao, FRICS, CEO, Vestian.

The first half this year witnessed an absorption of 16.6 million square feet, showcasing an increase of 8 per cent over the same period a year earlier. Mumbai and Pune together accounted for 63 per cent of the total absorption in H1 2024.

Third-party logistics (3PL) companies dominated absorption with a 39 per cent share in H1 2024.

Similarly, the share of engineering and manufacturing and automobiles and auto components sectors also saw an increase from 16 per cent and 4 per cent in H1 2023 to 22 per cent and 9 per cent in H1 2024, respectively.

Weighted average rentals marginally declined by 3 per cent to Rs 21.6 per square feet a month in H1 2024 over the same period a year ago.

Rentals in Bengaluru declined the highest by 8 per cent whereas Hyderabad witnessed a decrease of 7 per cent during the same period, said the report.