The National Capital Region (NCR) witnessed a marginal warehouse rental increase of 1.1% year-on-year (YoY) in H1 2021. Mumbai and Bengaluru witnessed a decline of 7.8% and 4.6%, respectively. The rentals for the next 12 months for these cities is expected to be stable, per a new report.
Mumbai stood at the bottom and witnessed a decline of 7.8% in the six-month rental change. The city still remains the most expensive prime warehousing rental market in the country, the report said.
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 and the outlook on the rents of prime warehouse markets in H2 2021 is expected to remain stable, said a new report by global property consultancy Knight Frank titled Asia Pacific Warehouse Review: H1 2021.
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.
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 the decline, Mumbai remained the most expensive prime warehouse rental market in the country, attracting $2.93 per sq m per month. Bengaluru is the second most expensive prime warehousing market in India, recording rental at $2.72 per sq m per month. Rental for prime rental asset class in NCR recorded at $2.59 per 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, it said.
“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,” said Shishir Baijal chairman and managing director, Knight Frank India.
“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,” he said.
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