While logistics rents across the Asia-Pacific region edged down for the first time since 2020, India bucked the trend, registering the strongest growth in the region. According to Knight Frank’s latest Logistics Highlights H1 2025 report, rents in India’s logistics sector rose by 3.4% year-on-year, even as the broader regional index dipped 0.4%, marking the first annual decline in five years.
The growth in India’s logistics rents comes against the backdrop of a resurgent manufacturing sector, which posted its highest performance in 14 months, driven by robust domestic demand, higher output, and rising exports.
📈 India’s Logistics Resilience Amid Regional Weakness
The broader Asia-Pacific market saw rental growth stall in H1 2025 amid global trade tensions, pre-emptive shipping strategies, and occupier caution. Rents in key Chinese mainland markets continued to decline, while growth in Southeast Asia and Australia moderated.
In contrast, India posted a 3.4% rise in logistics rents, accelerating from 2.1% in H2 2024, despite a simultaneous increase in vacancy levels across major warehousing hubs. According to Knight Frank, this indicates sustained demand, particularly from the manufacturing sector, which continues to anchor the logistics space.
🧮 Table 1: Logistics Rent Growth – H1 2025 (YoY %)
| Country/Region | YoY Change in Logistics Rents |
|---|---|
| India | +3.4% |
| Brisbane (Australia) | +5.0% |
| Southeast Asia Avg. | +1.2% |
| Chinese Mainland | -12.8% |
| Asia-Pacific Avg. | -0.4% |
Source: Knight Frank Logistics Highlights H1 2025
🏭 Manufacturing Boom Underpins Real Estate Demand
India’s S&P Global Purchasing Managers’ Index (PMI) for manufacturing climbed to 58.4 in June 2025, the highest since April 2024. The surge reflects rising international orders, an uptick in factory output, and record-breaking job creation in the sector.
🗣️ Quote:
“India’s logistics sector continues to display strength and stability, driven by the manufacturing rebound, policy support, and sustained occupier interest,”
said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The report notes that manufacturers are the most active occupiers in Indian logistics markets, contributing significantly to the demand seen in warehouse clusters across Mumbai, Delhi NCR, Pune, and Bengaluru.
🧭 India as a Strategic Alternative in Supply Chain Realignment
The growth in India’s logistics sector also aligns with a broader realignment of global supply chains. As companies adopt China-plus-one strategies to mitigate geopolitical and tariff-related risks, India is increasingly being viewed as a cost-effective and strategically located alternative.
🗣️ Quote:
“India, with a more competitive tariff structure and lower costs, is emerging as an important node in regional supply chains,”
said Christine Li, Head of Research, Asia-Pacific, Knight Frank.
Occupiers across APAC are now reconfiguring their logistics portfolios—prioritising proximity to ports, multimodal networks, and high-demand consumption zones. India’s strong infrastructure push and industrial corridor development enhance its attractiveness in this repositioning.
🏗️ Vacancies Rise, But So Do Rents
Interestingly, India’s logistics rents continued to rise despite a reported increase in vacancy levels across its three largest markets. This indicates that vacancy is not uniformly distributed, and that demand is highly concentrated in prime micro-markets with strong connectivity and infrastructure.
🧮 Table 2: India’s Manufacturing & Logistics Snapshot – H1 2025
| Indicator | Value |
|---|---|
| Manufacturing PMI (June 2025) | 58.4 |
| YoY Logistics Rent Growth | +3.4% |
| Previous Rent Growth (H2 2024) | +2.1% |
| Key Demand Drivers | Manufacturing, Retail, E-commerce |
| Occupier Sentiment | Optimistic, Selective |
| Key Growth Clusters | Bhiwandi, Chakan, NH-48, Hosur |
Source: Knight Frank India, Industry estimates
🔮 Outlook: Strategic Consolidation and Location-Led Growth
Despite the near-term uncertainties stemming from front-loaded shipments and global trade volatility, the report anticipates continued momentum in select Indian markets. Occupiers are expected to consolidate into larger, more efficient hubs near urban centres while vacating non-strategic locations.
🗣️ Quote:
“As rental growth moderates regionally, India presents a window of opportunity for occupiers to reposition portfolios for long-term growth,”
said Tim Armstrong, Global Head of Occupier Strategy, Knight Frank.
📌 Conclusion
India’s logistics real estate sector appears to be on a distinct growth trajectory, driven by a manufacturing-led economic rebound and strategic shifts in global supply chains. Even as Asia-Pacific faces its first logistics rent decline since 2020, India is emerging as the outlier—growing, repositioning, and redefining itself as a logistics and manufacturing powerhouse in the region.
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