Home Real Estate Prime warehouse rents in NCR, Mumbai and Bengaluru remain stable

Prime warehouse rents in NCR, Mumbai and Bengaluru remain stable


Knight Frank, a leading global property consultancy, in its latest report – Asia Pacific Warehouse Review: H1 2021 cited that despite a weak economy, rentals for prime warehouse markets across Asia-Pacific (APAC) region remained largely unchanged. The region saw a marginal fall of 0.1% year-on-year (YoY) in H1 2021. The outlook on the rents of prime warehouse markets in H2 2021 is expected to remain stable.

The report tracks the prime warehouse rental performance across 17 key cities in the APAC region. As per the report, 13 of 17 APAC markets recorded stable or increased rents in H1 2021. Rents in Jakarta and Beijing saw the sharpest increase, 5.6% and 4.4% respectively, in the APAC region. The most expensive warehousing rental market in the region, Hong Kong SAR, is expected to remain stable. 

With reference to the Indian markets, National Capital Region (NCR) witnessed a marginal warehouse rental increase of 1.1% YoY in H1 2021. Mumbai and Bengaluru witnessed a decline of 7.8% and 4.6% respectively. The rental forecast for the next 12 months for these cities is expected to be stable. 

According to the recently launched ‘India Warehousing Market Report – 2021’, Knight Frank India projected the warehousing transactions for the top eight Indian cities (primary markets) to grow at a compound annual growth rate (CAGR) of 19% to 76.2 mn sq ft (7.08 mn sq m) by Financial Year (FY) 2026 from 31.7 mn sq ft (2.95 mn sq m) in FY 2021. Despite decline, Mumbai remained the most expensive prime warehouse rental market in the country, attracting USD 2.93/ SQ M per month. Bengaluru is the second most expensive prime warehousing market in India, recording rental at USD 2.72 / SQ M per month. Rental for prime rental asset class in NCR recorded at USD 2.59/ SQ M per month. Owing to increased input costs, the Indian asset owners are not expected to reduce the rents in the next 12 months.

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According to Shishir Baijal Chairman and Managing Director, Knight Frank India, “The warehousing sector in India witnessed a marginal impact of the second wave of pandemic as the occupiers were well geared for negating the exigencies. More than half of the area transacted in top Indian warehousing markets were recorded in the prime asset properties. The warehousing markets in primary and secondary Indian markets are likely to remain resilient in coming months.”

Shishir further added, “Rents for warehouses in Mumbai, Bengaluru have corrected while NCR has seen marginal YoY growth in H1 2021. While higher construction costs, due to the increasing prices of steel and other input materials are expected to leave little room for asset owners to compromise on rent in the next 12 months, the improving but uncertain demand environment due to an evolving pandemic could still cause significant headwinds for rental growth. This stalemate could well break towards the end of the 12-month period as vaccinations gather pace and occupiers eventually submit to higher rents due to inflationary pressures.”