The surge in e-commerce startups and import-export has increased but recent geopolitical tension has disrupted the supply chain and impacted valuations of the commercial real estate linked to these businesses. According to a report by Knight Frank, the annual rent growth in the logistics market across the Asia-Pacific (APAC) saw just 2.4 per cent YoY between January to June, i.e., H1 2024. This is significantly less as compared to H1 of 2023 when the same market grew by 6.2 per cent. But Indian markets are climbing the chart at a fast and furious rate. Delhi-NCR is now at the 8th position out of 13 cities in the Asia-Pacific logistics market annual rent growth.
The national capital region, Delhi-NCR, has shown a growth of 3 per cent in rental rates. This is the highest compared to the other two key markets Mumbai and Bengaluru. Mumbai witnessed a 2.3 per cent growth while Bengaluru had approximately 2.3 per cent growth in rental yield. The outlook for next 6 months is encouraging for the entire country.
Delhi on top, Mumbai and Bengaluru follow
The city’s rent grew at 3 per cent YoY at Rs 20.80 sq ft per month with 15.7 per cent vacancy in the market. Mumbai secured the 11th spot with annual rental growth at 2.3 per cent YoY and a drop in vacancy level to 9.4 per cent in H1 2024 from 10.3 per cent in the previous year. Bengaluru ranked 12th based on annual rental growth in H1 2024, rent grew at 2.3 per cent YoY to Rs 22 sqft per month and vacancy was at 21.1 per cent.
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The increase in Indian warehousing market rents has been consistent after the pandemic due to an increased occupier demand in FY 2023. Despite a slowdown in occupier activity, the rent growth in Bengaluru, Mumbai and NCR in H1 2024 was maintained at the levels seen at the end of H1 2023.
Shishir Baijal, Chairman and Managing Director, Knight Frank India 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 overall market volumes.”
The 55 per cent of warehousing transactions occurred in Grade A spaces during H1 2024. Warehouse transactions across eight primary markets of India reached 23 million square feet during this period and were well distributed across. Mumbai, the leading market in India, accounted for 20 per cent of the total warehousing volume was driven primarily by the 3PL sector.
NCR became the second most productive market with 17 per cent of the total warehousing area transacted amongst the top eight Indian cities during the H1 2024, 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 significant 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 per cent of the total transaction volume during this period.
How is rest of APAC performing? China low, Singapore stable
In the first half (H1) of 2024, a total of 17 cities were tracked out of which only 13 cities witnessed a rent surge in the annual rental market. Despite the growth in most cities, the overall rental growth declined. The challenging conditions in the Chinese Mainland, especially in Beijing and Shanghai, can be mentioned as the main factors for the decline. The Chinese market saw a 13.5 per cent drop in rents and vacancies are exceeding 20 per cent.
From: financialexpress
Financial News
