Global property brokerage firm Knight Frank’s Asia-Pacific Logistics Highlight H1 2023 report unveiled that, Bengaluru followed by Delhi-NCR have perpetuated their position to remain in the list of top-10 APAC markets in terms of warehousing rent growth in the first half of 2023, and The Asia-Pacific (APAC) logistics market exhibited growth of 10.4 percent year-over-year (YoY) during the H1 2023. While Bangalore and Delhi-NCR secured 6th and 8th positions, Mumbai secured 11th rank in the list.
Manila topped the list recording the highest rental growth of 49.3 percent year-on-year in Asia-Pacific, while Bengaluru showed a steady growth of 7.5 percent followed by Delhi with 6.6 percent and Mumbai 4.2 percent y-o-y growth. The rent in Bengaluru Rs.21.50 sqft/ month, compared to Rs.20sqft/month last year, and the vacancy level is at 15.8 percent. While in Delhi the rent is Rs.20.20sqft/ month which was Rs.19sqft/month last year and the vacancy rate is standing at 9.7 percent. In Mumbai, the rent is standing at Rs.23.06sqft/ month, compared to Rs.22sqft/month and the vacancy rate significantly witnessed a downfall to 10.3 percent from 14 percent in the previous year.
According to Knight Frank, “Demand is still holding steady at close to record levels in the three major Indian warehousing markets. As vacancies significantly decreased over the past six months, Mumbai and Bengaluru saw a solid increase in lease transaction volumes.”
Rents in all the three locations started to go up because of the increasing demand of e-commerce manufacturing and third party logistics players have plugged the gap. Mumbai and Bengaluru experienced healthy growth in leasing transaction volumes as vacancies tightened rapidly through the last six months, while activity in Delhi got slowed recently.
Shishir Baijal, chairman and MD, Knight Frank India, opined that, "With India emerging as one of the fastest growing major economies in the world, business activities across the country are moving firmly along the growth path. The Indian warehousing sector in particular has been a standout performer. Transaction volumes in FY23 have equalled the record-breaking levels of FY22.”
Christine Li, head of research at Knight Frank Asia-Pacific, observed that, the conditions within the Chinese mainland market are displaying a divergence from the rest of the region, as its economy continues to underperform. This issue however is counterbalanced by more positive sentiment in other areas, where the growth in demand outpaces the supply of new units.
While Manila topped the list with 49.8 percent increase in warehouse rent, it was followed by Brisbane with 23.8 percent, Sydney with 38.6 percent. On the other hand, Sanghai and China observed a decrease in rent of more than 1 percent.
Australia has witnessed limited availability which drove the broad – based rental growth as vacancy rates, especially in the Eastern Seaboard continued to sit at record-low levels. Over 50 percent of the pipeline is already pre-committed and therefore the undersupply situation is expected to continue in the markets of Australia and New Zealand.
At last, Shishir Baijal convincingly mentioned that, demand from the e-commerce sector is expected to recover in the upcoming months and this is expected to keep the market buoyant along with the rising demand from manufacturing and 3PL sectors.
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