Mumbai (Maharashtra) [India], October 1 (ANI): The average prime warehouse rental growth is likely to hover between 3 and 5 per cent in 2020, according to Knight Frank's latest Asia Pacific Warehouse Review report released on Thursday.
The report tracks the prime warehouse rental performance across 17 key cities in the Asia Pacific region. Despite spread of COVID-19, cities registered an average rental change of minus 0.02 per cent year-on-year in 1H20.
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 the first half of current calendar year, 12 of 17 cities recorded stable or rising rents in prime warehouse and logistics markets.
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.
A study on asset class performance across 22 Indian cities by Knight Frank India shows the warehousing sector had seen a strong demand growth of 44 per cent compound annual growth rate with transactions increasing from 13.9 million square feet in FY17 to 41.3 million square feet in FY20.
Balbirsingh Khalsa, National Director for industrial and logistics at 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 tenancy mix, it is probable that all cities across India to remain stable till the year-end," he said.
On the rental warehouse performance in A-Pac region, Tim Armstrong, Head of occupier services and commercial agency at 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."
According to the report, market conditions for 16 of the 17 cities tracked are expected to remain stable or improve over the next 12 months. The positive outlook for growth in the second half of 2020 is due to a higher space appetite from e-commerce players and essential commodities.
Tokyo recorded the highest half-on half rental growth at 4.2 per cent due to healthy take-up rates and the lack of available prime assets within the city.
Shanghai warehouse markets recorded the healthiest rental growth compared to Beijing and Guangzhou at 3 per cent half-on-half, led in part by a pickup in storage demand from cold chain operators. (ANI)