Delhi-NCR Tops Indian Logistics Markets with 3% YoY Rental Growth in H1 2024

Among the key markets, Delhi-NCR outperformed the regional average with 3.0% rental growth, while Mumbai and Bengaluru recorded growth slightly below the regional figure at 2.3%. Despite the slowdown, the outlook for the next six months remains stable across India’s key logistics markets, driven by continued demand for warehousing and logistics spaces. Since the pandemic, India’s warehousing market has witnessed notable rental growth due to a surge in occupier demand, which peaked in FY 2023. Although occupier activity has tapered off, rental growth in Bengaluru, Mumbai, and the NCR persisted in H1 2024, maintaining levels seen at the end of H1 2023. However, high vacancy rates in NCR and Bengaluru, a result of speculative development, may curb future rental increases. Nevertheless, strong demand from the manufacturing and 3PL sectors, coupled with high development costs, is expected to sustain rent levels through the remainder of 2024.

In the APAC logistics market rankings, Delhi-NCR stands 8th in terms of annual rental growth, with rents increasing by 3.0% YoY to Rs 20.80 per sq ft per month. The city’s vacancy rate is currently at 15.7%. Mumbai ranks 11th, with rents growing by 2.3% YoY to Rs 23.60 per sq ft per month, and its vacancy rate has dropped to 9.4% in H1 2024 from 10.3% in the previous year. Bengaluru, however, fell six places to 12th place, with rents growing at 2.3% YoY to Rs 22.00 per sq ft per month and a vacancy rate of 21.1% in H1 2024.

Across the broader APAC region, rental growth was uneven, with 13 out of 17 tracked cities seeing increases in H1 2024. However, overall growth was dampened by challenges in Mainland China, particularly in Beijing and Shanghai, where a decline in business activity led to a 13.5% drop in rents and vacancy rates exceeding 20%, prompting landlords to reduce rents and offer shorter leases. In contrast, Singapore’s logistics rents surged by 6.7% over six months and 10.8% YoY, fueled by strong manufacturing performance and 10 consecutive months of PMI expansion, with forecasts predicting a further 3% to 5% rise in prime logistics rents for 2024.

In India, warehouse transactions across eight primary markets reached 23 million square feet (mnsq ft) in H1 2024, with 55% of these transactions involving Grade A spaces. Mumbai led the market, accounting for 20% of the total warehousing volume, primarily driven by the 3PL sector. Delhi-NCR followed, representing 17% of the total warehousing area transacted, with strong contributions from the 3PL and manufacturing sectors.

 Notably, in H1 2024, the manufacturing sector’s transaction volume surpassed that of the traditionally dominant 3PL sector. Companies from the manufacturing industry, including those in automotive, energy, and chemicals, accounted for a significant 36% of the total transaction volume during this period.