Sectors like e-commerce, third-party logistics (3PL), and manufacturing have been bringing a sustained demand for warehousing, pushing prime logistics rentals across key Indian markets upward catapulting them into Asia’s fastest-growing warehousing rentals destinations.
As shown by Knight Frank Asia-Pacific Logistics report, the leading Indian cities including Mumbai, Bangalore, and Delhi-National Capital Region (NCR) have witnessed 9.3%, 6.4%, and 5.9% year-on-year growth respectively in warehousing rentals during the financial year of 2022.
Emerging as the top warehousing market of India for rental growth during the period, Mumbai has ranked fourth among Asia’s fastest-growing warehousing rental destinations. While Bangalore and Delhi-NCR have stood at seventh and eighth positions in this Asia tally.
“Rents for warehouses in India witnessed a substantial growth signifying resiliency despite supply chain disruptions globally and a slow-down in demand from e-commerce players. Going into the second half of 2022, 3PL players and the manufacturing industry are expected to drive space take-up while e-commerce players resume expansion plans. With the robust growth seen in rents, the market balance has tilted in favor of the landlord. The Indian warehouse market, with resilient fundamentals, is poised for sustained growth despite inflationary pressures,”Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Mumbai witnessed prime warehousing rents rising to Rs 265 per sq ft per year in FY 2022 from Rs 243 per sq ft a year in FY 2021. On a 12-month outlook basis, the prime logistic rents across Mumbai, Bangalore, and Delhi-NCR are expected to increase on the back of rising demand.
“There has been evidence of upward pressure on prime logistics rents across the Asia region and the momentum could persist for the remainder of 2022, as long as high oil prices and supply chain disruptions are here to stay. Nevertheless, higher borrowing costs coupled with looming recession fears due to the aggressive interest rate hikes could result in a more cost-conscious business environment in the near-term, which could moderate rental growth trajectory in the next 6-12 months,” saidTim Armstrong, Head of occupier strategy and solutions, Asia-Pacific at Knight Frank.
Knight Frank has tracked prime logistics rents across 17 key Asia-Pacific cities, registering an average rise of 3% year-on-year, propelled by Australia, New Zealand, India, and Singapore.
The first half of 2022 saw all of the 17 cities record stable or rising rents in prime warehouse and logistics markets. Melbourne, Auckland, and Sydney led the tally, recording the highest annual rental growth in FY 2022.
Melbourne recorded 13.9% followed by Auckland with 11.7% and Sydney with 11% annual rental growth during the same period. On a half-yearly basis, Singapore led the APAC region in rental expansion with 10.9% growth.