Hyderabad Warehousing & Industrial Market 2024

The Hyderabad industrial market, a significant contributor to the Indian warehousing sector, experienced a period of subdued activity in the second half of 2023. This blog post, drawing on market insights, explores the key trends that shaped this period, delves into the underlying factors, and analyzes the future prospects of the market.

A Shift in Leasing Dynamics

The latter half of 2023 witnessed a notable decline in leasing activity within the Hyderabad warehousing sector. Compared to the first half of the year, lease volume dipped by a substantial 60%. Year-on-year data paints an even starker picture, revealing an 80% decrease. This translates to a total leasing volume of merely 0.52 million square feet for H2 2023.

A critical factor behind this slowdown was a significant reduction in mid-to-large sized deals (exceeding 1 lakh square feet). These deals, traditionally a mainstay of the market, primarily originated from sectors like e-commerce, consumer durables, and electronics. They previously contributed over 60% of annual leasing activity.

However, the market witnessed a positive trend in the form of a rise in small and medium-sized transactions. Companies from the FMCG (Fast Moving Consumer Goods), electronics, and chemical sectors played a more prominent role in driving this segment of leasing activity during H2 2023. When analyzing the entire year of 2023, FMCG (30%), electronics (17%), and 3PL (Third-party logistics) (15%) emerged as the leading sectors fueling warehousing leasing demand.

Geographical Preferences Emerge

The report also unveils interesting spatial dynamics within the Hyderabad market. The northern corridor, particularly the Medchal submarket, witnessed a significant surge in demand. This area captured a dominant 60% share of the total leasing volume in 2023. This rise in demand can be attributed to the growing requirements of 3PL and electronics companies seeking warehousing space.

Stable Rentals Amidst Downturn

An interesting observation is that despite the slowdown in leasing activity, warehouse rentals remained largely stable across prominent locations like Shamshabad, Patancheru, and Medchal. This indicates a potential disconnect between rental prices and short-term market fluctuations.

However, land rates exhibited a different trend. Key submarkets like Medchal, Kothur, Shamirpet, and Patancheru saw land prices rise by an average of 8-12% on an annual basis. This highlights the potential for future rental adjustments as land cost inflation filters through to occupancy costs.

The Challenge of Grade A Warehousing

The report identifies a persistent challenge for businesses seeking warehousing space in Hyderabad: the limited availability of modern, high-quality storage solutions. The market experiences a scarcity of organized Grade A warehouse space, which can restrict the operational flexibility and efficiency of businesses seeking such facilities.

Looking Forward: Policy and Infrastructure as Catalysts for Growth

Despite the temporary setback observed in H2 2023, the Hyderabad industrial market presents a promising outlook for the future. The Telangana state government's recently implemented industrial policy is a significant development with the potential to drive positive change. This policy aims to create a framework that attracts foreign investments and fosters industrial growth within the state.

Furthermore, the Hyderabad Metropolitan Development Authority's plans to develop six industrial parks along the Outer Ring Road in the next two years signal a strong commitment to improving logistics infrastructure. This enhanced infrastructure is expected to streamline freight movement and offer better support to industrial activity in the Hyderabad Metropolitan Area. The cumulative impact of these government initiatives, alongside the market's inherent strengths, is likely to propel the Hyderabad industrial sector towards a robust future.

Key Takeaways:

  • Hyderabad's industrial market experienced a slowdown in H2 2023, with a significant drop in large-sized deals.
  • FMCG, electronics, and 3PL companies were the major drivers of leasing activity in 2023.
  • The northern corridor, particularly the Medchal submarket, emerged as the preferred location for warehousing.
  • Warehouse rentals remained stable, while land prices witnessed an increase in key submarkets.
  • Limited availability of Grade A warehouse space remains a challenge.
  • The Telangana state government's industrial policy and infrastructure development initiatives are expected to drive future growth in the Hyderabad industrial sector.


The Hyderabad Warehousing and Industrial Market navigated a period of subdued leasing activity in the second half of 2023. While a decline in large-sized deals impacted overall volume, the market witnessed a rise in smaller transactions driven by FMCG, electronics, and chemical companies. The northern corridor, particularly Medchal, emerged as a preferred location for warehousing. Warehouse rentals remained stable, but land prices witnessed an upward trend. The limited availability of Grade A warehouse space persists as a challenge. However, the Telangana state government's industrial policy and the focus on infrastructure development are positive indicators for future growth. Real estate consultants suggest businesses seeking warehousing space in Hyderabad stay informed about these developments and explore opportunities in emerging locations like Medchal. By understanding the current market dynamics and anticipating future trends, businesses can make informed decisions to optimize their warehousing strategies within the Hyderabad market.

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