Warehousing Rentals Remained Largely Stable in H1 2025 Amid Fluctuating Market: Vestian

New Delhi, August 8, 2025: Despite recording a robust absorption of 18.9 mn sq ft (MSF) in H1 2025, average rental values across the top seven cities remained largely stable, ranging between INR 18–31/sq ft/month.

Pune holds the highest rental of INR 31/sq ft/month driven by strong demand from 3PL, automotive, engineering and manufacturing sectors. The city recorded a significant 34 per cent increase on a half-yearly basis and 13 per cent YoY 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, pushing up overall transaction values.

On the other hand, Mumbai witnessed the lowest rentals of INR 18/sq ft/month. While rentals increased by two per cent in H1 2025 compared to H2 2024, they declined by two per cent over the same period a year ago. The overall stability in rentals can be attributed to balanced demand-supply dynamics, supported by supply additions.

Rentals in Hyderabad remained steady at INR 19/sq ft/month in H1 2025 with a modest annual increase of one per cent. Conversely, Bengaluru recorded an annual decline of five per cent despite a significant increase in demand, reaching INR 19/sq ft/month. Rentals in Chennai stood at INR 25/sq ft/month in H1 2025, witnessing a half-yearly increase of three per cent and an annual rise of two per cent.

Rentals in the NCR region contracted significantly by 10 per cent annually and four per cent over H2 2024, reaching INR 21/sq ft/month in H1 2025. This decline could be attributed to a large share of leasing, around 60 per cent, recorded at rates below the city’s average rent.

Rental value in Kolkata is at  INR 21/sq ft/month, showcasing a muted half-yearly decline of one per cent but an annual growth of eight per cent despite limited absorption activities.

City-wise Rental Value

Source: Vestian Research

Despite a significant growth in absorption and rentals, investments dropped sharply to $32 million in H1 2025, marking a steep 98 per cent annual decline. Its share in total investment also reduced from 42 per cent in H1 2024 to a mere 1 per cent.

This substantial downturn indicates a combination of factors influencing investor sentiment, including a strategic shift toward asset-light models, cautious investor behaviour amid global economic uncertainties and rising operational costs.

Institutional Investment

Source: Vestian Research

Shrinivas Rao, FRICS, CEO, Vestian, said, “While the first half of 2025 witnessed a dip in investment, 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 3 cities are expected to drive the next wave of growth in the sector.”