Knight Frank India recently released its study on India’s warehousing leasing market – the ‘India Warehousing Market Report-H1 FY 2024’. The Report cited that warehouse leasing or transactions across the eight primary markets of India were recorded at — 23 million sq.ft. in H1 FY 2024 (April-September 2023). More than half of these transactions occurred in Grade A spaces during the current analysis period.
Pune, often regarded as the automotive hub of India, has surged ahead in the warehousing rental market. According to the report by Knight Frank India, Pune now holds the title of being the most expensive warehousing rental market among the reviewed cities in India.
India’s warehousing rental market is experiencing significant shifts, with Pune emerging as the most expensive warehousing rental market in the country. This transformation is part of a broader trend where various Indian cities are witnessing substantial changes in warehousing rental rates, transaction volumes, and the factors influencing this sector.
The average rents for Grade-A warehouses in Pune were reported as INR 25.9/sq ft/month. This change is indicative of the city’s economic growth and the increasing demand for warehousing space driven primarily by the automotive industry. Pune accounted for 19% of the total warehousing volume, demonstrating its dominant position in the market.
Kolkata follows closely behind Pune as the second most expensive warehousing rental market among the eight Indian cities. The city recorded average rentals of INR 23.6/sq ft/month, showcasing its relevance in the warehousing sector. Transaction activity in Kolkata was also notable, with the city witnessing warehousing transactions of 1.84 million sq ft in H1 of the ongoing financial year.
Mumbai, a key economic and logistics hub, held the second most prolific position in the market, representing 16% of the total warehousing area transacted during the period. The 3PL (third-party logistics) sector played a significant role in Mumbai’s warehousing market.
The relative unavailability of viable land for warehousing, high land prices, and a lack of institutional supply have contributed to keeping warehousing rates high. Despite a pause in occupier traction, rent growth across markets remained healthy in H1 FY 2024 compared to the levels existing at the end of FY 2023.