Auto, electronics, and engineering sectors lead surge in demand as Pune and Chennai dominate leasing activity across top cities.
Manufacturing to Anchor India’s Industrial Real Estate Growth
India’s industrial real estate market is undergoing a transformational shift, with manufacturing projected to account for 46% of total absorption by 2027, according to a new JLL report.
With leasing demand expected to reach 34 million sq. ft across the top eight cities, the sector is emerging as a powerhouse for industrial property development, outpacing traditional logistics-driven demand.
Sector Drivers: Auto, Electronics & Engineering
The surge is being led by:
- Automobile manufacturers, expanding EV and components production
- Electronics firms, responding to both domestic demand and global supply chain diversification
- Engineering players, pushing for precision manufacturing and export growth
Government policies such as Make in India and targeted production-linked incentives (PLI) are accelerating investment in advanced manufacturing clusters, further boosting real estate absorption.
Premium Facilities in High Demand
Manufacturing today requires more than just space. Demand is growing for Grade A facilities—customised, compliant, and efficient industrial properties. The shift is evident:
- Grade A space demand grew from 70% in 2019 to 87% by Q3 2025
- Focus has moved to hygiene standards, sustainability, and safety compliance
- Facilities are increasingly designed to accommodate automation and clean room environments
This evolution reflects a broader transition from traditional logistics parks to sophisticated industrial campuses that meet global manufacturing benchmarks.
Pune & Chennai Lead, Bengaluru Rising
Among the top eight cities, Pune and Chennai dominate, accounting for 75% of total manufacturing leasing as of Q3 2025. Their strengths include:
- Strategic locations with access to ports and highways
- Strong automotive and electronics ecosystems
- Availability of skilled workforce and developed infrastructure
Bengaluru is also emerging quickly, with Mumbai and NCR showing robust growth—signalling widespread industrial expansion across urban India.
Future Outlook: Manufacturing as a Growth Engine
With 22.1 million sq. ft leased in 2024 alone, manufacturing’s momentum shows no signs of slowing. The combination of demand-side growth, government incentives, and upgraded infrastructure is establishing industrial real estate as a critical enabler of India’s economic ambitions.
As India strengthens its position as a global manufacturing hub, industrial property developers are recalibrating their strategies to focus on quality, scalability, and sustainability.
By 2027, manufacturing is expected to account for 46% of India’s industrial real estate demand, driven by auto, electronics, and engineering sectors. Cities like Pune and Chennai lead the surge, with rising demand for Grade A facilities reshaping the landscape and positioning manufacturing as a key pillar of India’s economic future.
