Delhi-NCR has been rated among top 10 Asia-Pacific logistics markets for annual rental growth for the first half this year, a report said on Thursday.

At 3 per cent rental growth, the Delhi-NCR logistics rental market recorded better growth, while Mumbai (2.3 per cent) and Bengaluru (2.3 per cent) were marginally below the regional growth figure, according to the report by Knight Frank.

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Delhi-NCR is positioned eighth in the APAC logistics market based on annual rental growth. At Rs 20.80 per square feet a month, the city’s rents grew at 3 per cent (year-on-year) and the vacancy level in the market now stands at 15.7 per cent.

The three key India markets noted a stable rental outlook for the next six months, owing to the continued demand for warehousing and logistics spaces across the country.

“The government’s focus on the manufacturing sector is proving successful, resulting in healthy demand from this sector. Along with the traditional anchor role of 3PL (third-party logistics) players, this has strengthened overall market volumes,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

The robust business environment, diversified warehousing demand, and growing institutional interest are likely to help the market regain its momentum in the near to medium term, he added.

Since the pandemic, the Indian warehousing market rents have experienced significant growth, driven by a surge in occupier demand that reached record highs through FY 2023.

Although occupier activity has since slowed, rent growth in Bengaluru, Mumbai, and NCR continued in H1 2024, maintaining levels seen at the end of H1 2023.

The overall Asia-Pacific logistics market saw a rental growth of 2.4% per cent in year-over-year (YoY) terms, marking a significant slowdown from the 6.2 per cent increase observed in H1 2023.

Despite 13 of 17 tracked cities seeing rent increases in H1 2024, overall rental growth slowed due to challenging conditions in Chinese Mainland, especially in Beijing and Shanghai.

In contrast, Singapore saw logistics rents grow 6.7 per cent in six months and 10.8 per cent YoY, driven by strong manufacturing and 10 consecutive months of PMI (Purchasing Managers’ Index) expansion, the report noted.