India's warehousing rentals remain stable in H1 2025 amid fluctuating market conditions: Report

New Delhi, Aug 8 Despite recording a robust absorption of 18.9 million square feet in the first half of 2025 (H1 2025), average rental values across the top seven Indian cities remained largely stable, ranging between Rs 18–31 per square feet per month, a report said on Friday.

Pune holds the highest rental of Rs 31 per square feet (sq ft) per month, driven by strong demand from third-party logistics (3PL), automotive, engineering, and manufacturing sectors, Vestian, an occupier-focussed workplace solutions firm, said in its report.

According to the report, Pune recorded a significant 34 per cent increase on a half-yearly basis and 13 per cent year-on-year, driven primarily by high-value transactions in key submarkets like Khed and Chakan.

Limited availability of land has led to an increase in land prices, further pushing up overall transaction values.

On the other hand, Mumbai witnessed the lowest rentals of Rs 18/sq ft per month among the top seven cities, while the rentals increased by 2 per cent in H1 2025 compared to the second half of 2024; they declined by 2 per cent over the same period a year ago, the report stated.

The overall stability in rentals can be attributed to balanced demand-supply dynamics supported by fresh supply additions.

According to the report, rentals in Hyderabad remained steady at Rs 19/sq ft per month in H1 2025, with a modest annual increase of 1 per cent.

Conversely, Bengaluru recorded an annual decline of 5 per cent despite a significant increase in demand, reaching Rs 19/sq ft/month.

“While the first half of 2025 witnessed a dip in investments, strong demand across key markets, the expansion of multimodal logistics infrastructure, and an emphasis on sustainable and tech-enabled solutions signal long-term growth. Strategic initiatives under the Gati Shakti plan and increasing traction in tier-2 and tier-3 cities are expected to drive the next wave of growth in the sector,” said Shrinivas Rao, FRICS, CEO, Vestian.

Meanwhile, rentals in Chennai stood at Rs 25/sq ft/month in H1 2025, witnessing a half-yearly increase of 3 per cent and an annual rise of 2 per cent, the report highlighted.

Rentals in the NCR region contracted significantly by 10 per cent annually and 4 per cent over H2 2024, reaching Rs 21/sq ft/month in 2025.

As per the report, the decline could be attributed to a large share of leasing, around 60 per cent, recorded at rates below the city’s average rent.

At the same time, rental value in Kolkata is at Rs 21/sq ft/month, showcasing a muted half-yearly decline of 1 per cent but an annual growth of 8 per cent, despite limited absorption activities, the report noted.

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