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Knight Frank's Asia-Pacific Logistics Highlight H1 2023 report indicates a robust growth of 10.4% in the APAC logistics market year-over-year (YoY). Of the 17 tracked cities, 15 experienced rising rents in H1 2023. Key Indian cities Bengaluru and Delhi-NCR have solidified their positions among the top 10 APAC markets for warehousing rent growth, with Mumbai securing the 11th spot. The report attributes the overall rise to resilient demand from e-commerce, third-party logistics (3PL) entities, and manufacturers.
In Southeast Asia, most cities exhibited stable or improved rents, with Manila leading with an impressive 49.3% YoY rental growth, fuelled by sustained demand from e-commerce. The preference for institutional-grade facilities in core and last-mile locations continued to drive leasing activity, and the China+1 strategy saw major manufacturers expanding in Southeast Asia.
Australasia witnessed broad-based rental growth due to limited availability, maintaining record-low vacancy rates. Despite a peak in the development cycle, with expectations of 800,000 – 900,000 square meters of new supply in each of the three major markets, over 50% of the pipeline is already pre-committed, indicating an ongoing undersupply situation in Australia and New Zealand.
In the Indian warehousing sector, demand remained robust across the key markets. Mumbai and Bengaluru saw healthy growth in leasing volumes as vacancies tightened, while Delhi-NCR experienced a slight slowdown from the previous period but remained active. Rents continued to rise in H1 2023 due to sustained demand and increased input costs. Although there was a temporary decrease in e-commerce demand, manufacturing and 3PL players filled the gap. The report anticipates a recovery in the e-commerce sector once excess capacities built up during the pandemic are absorbed, given the strong ongoing consumer demand.
Bengaluru secured the 6th position in the APAC logistics market based on annual rental growth, witnessing a 7.5% YoY increase to INR 21.50/sq ft/month, compared to INR 20/sq ft/month the previous year. The vacancy level is a healthy 15.8%, significantly lower than the 28.2% reported previously.
Delhi-NCR held the 8th position in the APAC logistics market for annual rental growth. With a 6.6% YoY increase to INR 20.20/sq ft/month, compared to INR 19/sq ft/month last year, the city has seen a drop in vacancy levels to 9.7%.
Mumbai ranked 11th in the APAC logistics market for annual rental growth. As the most expensive warehousing market in the country, Mumbai reported a 4.2% YoY growth, reaching INR 23.06/sq ft/month, compared to INR 22/sq ft/month. The vacancy level also significantly dropped to 10.3% from 14% the previous year.
In conclusion, the APAC logistics market, despite economic challenges, exhibits resilience and growth, with Indian cities playing a prominent role. Bengaluru, Delhi-NCR, and Mumbai's positions underscore their significance in the regional warehousing landscape, reflecting sustained demand, strategic growth, and favourable market conditions.
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