Prime warehouse rents in NCR, Mumbai, Bengaluru to remain strong in the next 12 months: Knight Frank

Bengaluru: Prime warehouse rents in NCR, Mumbai, Bengaluru to remain strong in the next 12 months due to a higher space appetite from e-commerce players and essential commodities.

According to Knight Frank latest report, the average rental growth of between 3 per cent to 5 per cent is expected by the end of 2020 for warehouses across the Asia Pacific. “Despite the spread of COVID-19, cities registered an average rental change of -0.02 per cent year on year –in H1 2020,” mentioned the report.

The report cited that 5 of 17 cities prime warehouse rents to increase over the next 12 months, including those in the National Capital Region (NCR), Mumbai, Bengaluru, Taipei, and Shanghai. In H1 2020, 12 of 17 cities recorded stable or rising rents in prime warehouse and logistics markets.

Tim Armstrong, head of occupier services & commercial agency, the Asia Pacific at Knight Frank said, “The outlook for industrial markets remains resilient due to robust demand from the e-commerce and essential goods sectors, as well as additional requirements for inventory storage to mitigate supply chain disconnects.”

The warehouse sector across Mumbai, NCR, and Bengaluru, which accounts for around two-thirds of all the warehouse stock in India, recorded stable rental growth within the first six months of 2020.

Mumbai, NCR and Bengaluru witnessed growth in demand for storage space for daily necessities; electronics and FMCG sectors were given a break in supply chains across the country.

Balbirsingh Khalsa, National Director Industrial & Logistics, Knight Frank India said, “The pandemic has led to a break in the supply chain across industries in the country that has resulted in an increasing demand for storage space from the daily necessities, electronics and FMCG sectors. A balance in demand-supply dynamics is expected to support the sustenance of an increase in rental growth. Due to the continued shift of the tenancy mix, it is probable that all cities across India to remain stable till the year-end.”

According to the recent ‘India Warehousing Market Report – 2020’, a study on asset class performance across 22 Indian cities by Knight Frank India, the warehousing sector had seen a strong demand growth of 44 per cent CAGR, with transactions increasing from 13.9 mnsq ft in FY 2017 to 41.3 mnsq ft in FY 2017 to 41.3 mnsq ft in FY 2020.