India’s warehousing sector recorded robust demand in the first half of 2025, with absorption touching 18.9 million sq ft across the top seven cities. Yet, average rental values stayed stable in the range of INR 18–31 per sq ft/month, according to Vestian Research.
Pune Leads with Highest Rentals
Pune registered the highest rental values at INR 31/sq ft/month, fuelled by demand from 3PL, automotive, engineering, and manufacturing sectors. The city posted a 34% half-yearly and 13% annual rise, mainly driven by high-value transactions in Khed and Chakan. Limited land availability and rising land prices further pushed transaction values upward.
Mumbai Posts Lowest Rentals
Mumbai recorded the lowest rentals among the top seven cities at INR 18/sq ft/month. While there was a 2% increase compared to H2 2024, rates dipped by 2% annually. Fresh supply additions and balanced demand-supply dynamics kept rents steady.
Mixed Trends Across Other Cities
- Hyderabad: INR 19/sq ft/month, 2% half-yearly rise, 1% annual increase.
- Bengaluru: INR 19/sq ft/month, no change half-yearly, 5% annual decline despite higher demand.
- Chennai: INR 25/sq ft/month, 3% half-yearly and 2% annual growth.
- NCR: INR 21/sq ft/month, down 4% half-yearly and 10% annually, with ~60% leasing below average rent.
- Kolkata: INR 21/sq ft/month, 1% half-yearly dip but 8% annual rise despite muted absorption.
City-wise Rental Snapshot
| City | Avg. Rentals (INR/sq ft/month) | H1 2025 vs H2 2024 | H1 2025 vs H1 2024 |
|---|---|---|---|
| Bengaluru | 19 | NIL | -5% |
| Chennai | 25 | 3% | 2% |
| Hyderabad | 19 | 2% | 1% |
| Pune | 31 | 34% | 13% |
| Mumbai | 18 | 2% | -2% |
| Kolkata | 21 | -1% | 8% |
| NCR | 21 | -4% | -10% |
Source: Vestian Research
Investment Sees Steep Decline
Despite strong absorption and steady rentals, institutional investments plunged to USD 32 million in H1 2025 – a 98% drop from H1 2024 levels. Its share in total real estate investments collapsed from 42% a year ago to just 1%.
Vestian attributes this to a strategic industry shift towards asset-light models, cautious investor sentiment amid global uncertainty, and rising operational costs.
| Period | Investments (USD Mn) | Share of Total RE Investments |
|---|---|---|
| H1 2025 | 32 | 1% |
| H2 2024 | 399 | 13% |
| H1 2024 | 1,559 | 42% |
Source: Vestian Research
Outlook: Long-Term Growth Drivers in Place
Shrinivas Rao, FRICS, CEO, Vestian, noted that despite the investment dip, demand remains strong in key markets. The expansion of multimodal logistics infrastructure, focus on sustainable and tech-enabled solutions, and strategic projects under the Gati Shakti plan will drive the next growth phase. Rising interest in tier-2 and tier-3 cities is also expected to add momentum.
Also Read: Robust Investments Bolster Warehousing & Logistics Sector in 2024
