APAC Logistics Rents Fall for First Time Since 2020
ECONOMY & POLICY

APAC Logistics Rents Fall for First Time Since 2020

Logistics rents across the Asia-Pacific region declined 0.4% year-on-year in H1 2025, marking the first annual drop since 2020, according to Knight Frank’s Logistics Highlights H1 2025 report. Despite global trade tensions and cautious occupier sentiment, India emerged as a standout performer, driven by robust manufacturing momentum and supply chain recalibration.

Regional Trends and Divergence
While rents largely remained stable across most markets, regional differences became more pronounced:

Mainland China continued to see rental declines, though the pace of decline moderated to 12.8% YoY, supported by government stimulus.

Australia and Southeast Asia saw slower rental growth, while vacancy levels rose in some cities.

India posted the strongest rental growth in the region at 3.4% in H1 2025, up from 2.1% six months earlier, despite a rise in vacancies in its top three logistics hubs.

India’s Manufacturing Surge Spurs Growth
India’s Purchasing Managers’ Index (PMI) hit a 14-month high of 58.4 in June, signalling rising output, export demand, and record employment growth. This surge has driven logistics demand, with the manufacturing sector remaining the largest occupier group.

“India’s logistics sector continues to display strength and stability, driven by the manufacturing rebound, policy support, and sustained occupier interest,” said Shishir Baijal, CMD, Knight Frank India.
“The rental growth reflects occupier confidence and the country’s rising potential as a key logistics hub in Asia-Pacific.”

Australia’s Mixed Outlook
Brisbane led the region with over 5% rental growth, but vacancy rates have surpassed historical averages. Landlords are offering higher incentives to attract tenants amid oversupply, though a slowdown in new development post-2025 is expected to stabilise the market.

Shifting Strategies: Occupiers Reassess Portfolios
Many companies across Asia-Pacific are re-evaluating their logistics footprints to balance cost control with operational flexibility. The current market presents a strategic window to reposition assets, particularly near urban centres and multimodal transport corridors.

“Real estate portfolios are increasingly being reconfigured to support resilient, regionalised supply chains,” said Tim Armstrong, Global Head of Occupier Strategy, Knight Frank.
“We’re seeing clear shifts towards larger, more efficient hubs closer to consumption centres.”

China Shows Signs of Stabilisation
Mainland Chinese markets, particularly Beijing and Shanghai, are gradually recovering. While vacancy rates remain high at 27.3%, rental declines are expected to narrow as peak supply phases out by late 2025. However, Beijing still faces pressure with 2 million sq m of new space scheduled for delivery in H2 2025.

Looking Ahead
As front-loaded shipments and tariff-driven demand ease, the logistics sector may enter a recalibration phase in H2 2025. Evolving geopolitical risks, supply chain shifts, and policy changes will drive more nuanced occupier strategies across the region.

“India, with a competitive cost and tariff structure, is emerging as a key alternative in China-plus-one strategies,” said Christine Li, Head of Research, Asia-Pacific, Knight Frank.

Occupier focus is likely to remain selective, favouring India and emerging Southeast Asian markets for long-term growth potential.

Logistics rents across the Asia-Pacific region declined 0.4% year-on-year in H1 2025, marking the first annual drop since 2020, according to Knight Frank’s Logistics Highlights H1 2025 report. Despite global trade tensions and cautious occupier sentiment, India emerged as a standout performer, driven by robust manufacturing momentum and supply chain recalibration.Regional Trends and DivergenceWhile rents largely remained stable across most markets, regional differences became more pronounced:Mainland China continued to see rental declines, though the pace of decline moderated to 12.8% YoY, supported by government stimulus.Australia and Southeast Asia saw slower rental growth, while vacancy levels rose in some cities.India posted the strongest rental growth in the region at 3.4% in H1 2025, up from 2.1% six months earlier, despite a rise in vacancies in its top three logistics hubs.India’s Manufacturing Surge Spurs GrowthIndia’s Purchasing Managers’ Index (PMI) hit a 14-month high of 58.4 in June, signalling rising output, export demand, and record employment growth. This surge has driven logistics demand, with the manufacturing sector remaining the largest occupier group.“India’s logistics sector continues to display strength and stability, driven by the manufacturing rebound, policy support, and sustained occupier interest,” said Shishir Baijal, CMD, Knight Frank India.“The rental growth reflects occupier confidence and the country’s rising potential as a key logistics hub in Asia-Pacific.”Australia’s Mixed OutlookBrisbane led the region with over 5% rental growth, but vacancy rates have surpassed historical averages. Landlords are offering higher incentives to attract tenants amid oversupply, though a slowdown in new development post-2025 is expected to stabilise the market.Shifting Strategies: Occupiers Reassess PortfoliosMany companies across Asia-Pacific are re-evaluating their logistics footprints to balance cost control with operational flexibility. The current market presents a strategic window to reposition assets, particularly near urban centres and multimodal transport corridors.“Real estate portfolios are increasingly being reconfigured to support resilient, regionalised supply chains,” said Tim Armstrong, Global Head of Occupier Strategy, Knight Frank.“We’re seeing clear shifts towards larger, more efficient hubs closer to consumption centres.”China Shows Signs of StabilisationMainland Chinese markets, particularly Beijing and Shanghai, are gradually recovering. While vacancy rates remain high at 27.3%, rental declines are expected to narrow as peak supply phases out by late 2025. However, Beijing still faces pressure with 2 million sq m of new space scheduled for delivery in H2 2025.Looking AheadAs front-loaded shipments and tariff-driven demand ease, the logistics sector may enter a recalibration phase in H2 2025. Evolving geopolitical risks, supply chain shifts, and policy changes will drive more nuanced occupier strategies across the region.“India, with a competitive cost and tariff structure, is emerging as a key alternative in China-plus-one strategies,” said Christine Li, Head of Research, Asia-Pacific, Knight Frank.Occupier focus is likely to remain selective, favouring India and emerging Southeast Asian markets for long-term growth potential.

Next Story
Real Estate

Hiranandani Launches India’s Largest Coastal Township in Alibaug

Hiranandani Communities, led by Dr Niranjan Hiranandani, has launched Hiranandani Sands, India’s largest integrated coastal township, near Mumbai in Alibaug, with an estimated revenue of Rs 170 billion. Spanning 225 acre, the township is designed as Mumbai’s lifestyle extension hub, featuring luxury homes, signature villas, plotted developments, and branded serviced apartments. Residents will have private beachfront access and a jetty, alongside five hotels covering luxury, business, and leisure segments, a mega convention centre, eco-wellness hub, beachside entertainment, and a globa..

Next Story
Real Estate

TDI City Kundli Relaunched with Rs 1 Billion Redevelopment Plan

TDI Infrastructure has announced a Rs 1 billion investment to redevelop and relaunch the 1,100-acre TDI City Kundli, positioning it as a natural and affordable alternative for residents of North and West Delhi. Situated just 30 minutes from Delhi via the newly operational UER-2, the township currently has around 7,000 plot owners and more than 5,000 apartments.“As part of the redevelopment, we are collaborating with Resident Welfare Associations (RWAs) to upgrade 62 parks across 23 acres, improve internal roads, enhance the existing clubhouse, and commence a new second clubhouse to support r..

Next Story
Infrastructure Transport

India Plans Rs 70 Billion Push for Shipbuilding and Ports

The Indian government is preparing a Rs 70 billion stimulus for the shipping sector, with the Union Cabinet expected to review three major schemes shortly, according to media reports. The initiative reflects India’s efforts to expand shipbuilding, port infrastructure, and maritime trade capacity in the coming years.Shares of leading shipbuilders such as Shipping Corporation of India (SCI), Garden Reach Shipbuilders & Engineers (GRSE), and Mazagon Dock Shipbuilders have already risen on expectations of government support.The plan centres on three key initiatives: a Rs 20 billion Shipbuild..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?