New Delhi, July 30 : India's manufacturing sector hit a 14-month high amid logistics rents across Asia-Pacific held nearly flat in the first half of 2025 (H1 2025), dropping 0.4 per cent year-on-year (YoY) despite global trade tensions and heightened caution among occupiers, a report said on Wednesday.

"India's manufacturing sector hit a 14-month high with its S&P Purchasing Managers' Index reaching 58.4 in June, the strongest performance across the region, driven by rising international sales, higher output, and record-breaking employment growth," Knight Frank said in its report.

Despite a rise in vacancies across India's three largest logistics markets, rents climbed at a faster 3.4 per cent in H1 2025, up from 2.1 per cent six months ago.

'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.

As global players reconfigure their supply chains, India offers a strategic alternative with a cost advantage and growing infrastructure base, Baijal added.

Rents in Chinese mainland markets continued their downward trajectory, momentum for rental growth in Australia and Southeast Asia slowed considerably, the report stated.

Most other regional markets registered modest gains, keeping the broader rent index in stable territory.

As per the report, much of the region's stability in H1 2025 may also reflect strategic front-loading of shipments ahead of tariff deadlines, raising questions about occupier demand in the coming months.

Companies are now reassessing costs and operational flexibilities to optimise their logistics portfolios.

'As firms weigh their strategic priorities, real estate portfolios are increasingly being reconfigured to support more resilient, regionalised supply chains," said Tim Armstrong, global head of occupier strategy and solutions, Knight Frank.

This includes investment in distribution hubs, proximity to ports or multimodal transit networks, and the integration of logistics infrastructure with office and support functions, he added.

Although conditions in logistics occupational markets in the region have remained stable so far, part of this stability may be attributed to the frontloading of shipments ahead of US tariff deadlines, as occupiers strategically advance inventory to avoid additional costs, the report highlighted.

/IANS