Delhi-NCR, Mumbai, and Bengaluru Show Positive Rental Growth in 2024
In the first half of 2024, Indian cities like Delhi-NCR, Mumbai, and Bengaluru showed stable rental growth in the logistics market, according to Knight Frank’s report titled Asia-Pacific Logistics Highlight H1 2024.
Delhi-NCR Leads in Rental Growth
Delhi-NCR recorded the highest rental growth among Indian cities at 3.0% year-over-year (YoY), surpassing the regional average of 2.4%. The city’s logistics rents now stand at Rs 20.80 per square foot per month, with a vacancy level of 15.7%. Despite high vacancy rates, sustained demand for warehousing and logistics spaces is expected to maintain rent levels for the rest of 2024.
Mumbai and Bengaluru Follow
Mumbai and Bengaluru both recorded a YoY rental growth of 2.3%, placing them at 11th and 12th in the Asia-Pacific (APAC) logistics market, respectively. Mumbai’s logistics rents are now Rs 23.60 per square foot per month, with a vacancy rate that dropped to 9.4% from 10.3% the previous year. Bengaluru’s rents are Rs 22.00 per square foot per month, with a vacancy level of 21.1%.
Stable Indian Market
Despite challenging conditions in key markets like Mainland China, Indian markets have remained stable. Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasized the importance of the manufacturing sector in driving demand within the Indian logistics market. He said, “The government’s focus on the manufacturing sector is proving successful, resulting in healthy demand from this sector. Along with the traditional anchor role of 3PL players, this has strengthened the overall market volume.”
Warehousing Market Activity
India’s warehousing market saw robust activity in H1 2024, with transactions across eight primary markets reaching 23 million square feet. Notably, 55% of these transactions occurred in Grade A spaces. Mumbai led the market, accounting for 20% of the total warehousing volume, driven primarily by the 3PL sector. NCR followed, representing 17% of the total area transacted, with significant contributions from the manufacturing and 3PL sectors.
Manufacturing Sector’s Growing Importance
For the first time, transaction volumes by manufacturing sector companies, including those in automotive, energy, and chemicals, surpassed those of the 3PL sector. This shift highlights the growing importance of manufacturing in India’s logistics landscape, traditionally dominated by the 3PL sector.
APAC Region Outlook
Christine Li, Head of Research for Asia-Pacific at Knight Frank, noted that while the logistics occupier markets in Mainland China face significant challenges, the long-term fundamentals supporting the APAC region’s logistics space market remain strong. Li said, “Despite moderating demand, the long-term fundamentals supporting the region’s logistics space market remain intact. As supply chains shift, manufacturing is emerging to be an important sector driving logistics development, along with e-commerce and 3PL players.”
Doubts Revealed
Delhi-NCR -: Delhi-NCR stands for Delhi National Capital Region. It includes Delhi and nearby areas like Gurgaon, Noida, and Ghaziabad.
Mumbai -: Mumbai is the capital city of the Indian state of Maharashtra. It is also the financial capital of India.
Bengaluru -: Bengaluru, also known as Bangalore, is the capital of the Indian state of Karnataka. It is famous for its IT industry.
Rental Growth -: Rental growth means the increase in the amount of money people pay to rent places like warehouses or homes.
Logistics Market -: The logistics market involves the storage and transportation of goods. It includes warehouses and delivery services.
Knight Frank -: Knight Frank is a company that provides advice on property and real estate. They help people buy, sell, and rent properties.
Vacancy Rates -: Vacancy rates show how many places, like warehouses, are empty and not being used.
Warehousing -: Warehousing is the storage of goods in large buildings called warehouses before they are sold or distributed.
Manufacturing Sector -: The manufacturing sector includes companies that make products in factories. These products can be anything from clothes to cars.
Private Equity Inflows -: Private equity inflows are investments made by private investors into companies or projects to help them grow.
Warehousing Transactions -: Warehousing transactions are deals made to buy, sell, or rent warehouse spaces.
Logistics Landscape -: The logistics landscape refers to the overall situation and trends in the logistics market, including storage and transportation of goods.
