Delhi-NCR appears in top 10 APAC logistics market list for annual rental growth in H1 2024

Knight Frank’s Asia-Pacific Logistics report noted that the Asia-Pacific (APAC) logistics market saw a rental growth of 2.4% in year-over-year (YoY) terms marking a significant slowdown from the 6.2% increase observed in H1 2023. The study noted that Delhi – NCR (3.0%) recorded rental growth higher than the regional average, while Mumbai (2.3%) and Bengaluru (2.3%) were marginally below the regional growth figure.

Besides, all three India markets noted a stable rental outlook for the next six months owing to the continued demand for warehousing and logistics spaces across the country.

Since the pandemic, the Indian warehousing market rents have experienced significant growth, driven by a surge in occupier demand that reached record highs through FY 2023. Although occupier activity has since slowed, rent growth in Bengaluru, Mumbai, and NCR continued in H1 2024, maintaining levels seen at the end of H1 2023. However, elevated vacancy levels in NCR and Bengaluru, resulting from speculative development, could potentially dampen the rent growth in these areas. Nevertheless, the combination of high development costs and strong demand from the manufacturing and 3PL sectors is expected to sustain rent levels for the remainder of 2024.

Delhi-NCR is positioned 8th in the APAC logistics market based on annual rental growth. At Rs 20.80/ sq ft/ month, the city’s rents grew at 3.0% YoY. The vacancy level in the market now stands at 15.7%.

Mumbai is in the 11th position in the APAC logistics market in terms of annual rental growth. With a YoY growth of 2.3%, the city’s rents now stand at Rs 23.60 / sq ft/ month. The vacancy level has also dropped to 9.4% in H1 2024 from 10.3% in the previous year. 

Bengaluru drops six places down and ranks 12th in the APAC logistics market based on annual rental growth in H1 2024. Rents in the city grew at 2.3% YoY to Rs 22.00 /sq ft/ month. Vacancy level stood at 21.1% in H1 2024.

In the Asia-Pacific (APAC) logistics market, despite 13 of 17 tracked cities seeing rent increases in H1 2024, overall rental growth slowed due to challenging conditions in Chinese Mainland, especially in Beijing and Shanghai. 

Business activity decline led to a 13.5% drop in rents and vacancy rates exceeding 20%, prompting landlords to cut rents and offer shorter leases. In contrast, Singapore saw logistics rents grow 6.7% in six months and 10.8% YoY, driven by strong manufacturing and 10 consecutive months of PMI expansion. Forecasts predict a further 3% to 5% rise in prime logistics rents for 2024.

APAC PRIME LOGISTIC RENTAL GROWTH IN H1 2024and OUTLOOK

CITY	RENTAL GROWTH	12 MONTH RENTAL OUTLOOK
Singapore	10.8%	↑
Vietnam SKER	9.9%	→
Manila	9.1%	↑
Melbourne	7.7%	↑
Brisbane	7.2%	↑
Sydney	3.4	→
Hong Kong SAR	3.3%	↓
Delhi-NCR	3.0%	→
Auckland	2.7%	↑
Greater Jakarta	2.4%	→
Mumbai	2.3%	→
Bengaluru	2.3%	→
Taipei	0.5%	↑
Greater Kuala Lumpur	0.0%	→
Bangkok	-0.5%	→
Beijing	-8.6%	↓
Shanghai	-15.0%	↓

Source: Knight Frank Research

Warehouse transactions across eight primary markets in India reached 23 million square feet (mnsq ft) H1 2024 (January – June 2024), with 55% of these transactions occurring in Grade A spaces during this period.

Transaction activities were well distributed across markets. Mumbai, the leading market in India, accounted for 20% of the total warehousing volume, driven primarily by the 3PL sector. Delhi-NCR was the second most prolific market, representing 17% of the total warehousing area transacted amongst the top eight Indian cities during the period, with 3PL and manufacturing sectors driving volumes. 

In H1 2024, the volume of transactions by manufacturing sector companies has surpassed that of the 3PL sector. This is notable as the 3PL sector has historically been the mainstay of the Indian warehousing market. Companies from the manufacturing sector, including those in automotive, energy, and chemicals, accounted for a significant 36% of the total transaction volume during this period.