A prime industrial plot in Hyderabad's Raidurg corridor sold at a significant premium in a recent e-auction, reflecting strong developer confidence in the region's industrial growth trajectory. The substantial premium over reserve price signals tightening availability and upward price pressure for industrial land in the corridor.
Industrial land markets remained supported during H1’26 as occupier demand strengthened while new supply became increasingly constrained. In the United States, industrial vacancy declined to approximately 6.8% by the end of Q2, while net absorption reached around 99 million square feet, reflecting robust demand for logistics and manufacturing space. Quarterly completions fell approximately 27% year-on-year to about 54 million square feet as elevated construction costs and financing conditions discouraged speculative development. Demand increasingly favoured strategically located sites offering strong transport connectivity, adequate power infrastructure and proximity to major consumption centres.
In India, industrial land costs also remained elevated in established manufacturing clusters, particularly Gujarat, where high land values increased the cost of setting up new production facilities. This encouraged some manufacturers to reduce facility footprints or defer expansion plans. Across markets, limited availability of development-ready land and continued investment in manufacturing and logistics infrastructure provided underlying support, although higher borrowing costs restrained activity in secondary locations.
Analyst Insight
According to Procurement Resource, industrial land costs are expected to remain firm as manufacturing reshoring, logistics expansion and limited site availability support well-connected industrial corridors, although elevated financing costs could moderate gains in secondary markets.
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In Q4’25, industrial land prices showed a steady upward trend across several regions, driven mainly by affordability pressure and long-term demand for logistics and industrial space. As property prices in major cities remained high, buyers and investors increasingly looked toward regional and outer-metro locations. This shift pushed land values higher in inland and less central areas, where availability was better and entry costs were lower.
Government actions also influenced the market. Large land releases for industrial use, especially for warehouses and factories, supported activity and investor confidence. These releases encouraged long-term development linked to e-commerce, data centres, and manufacturing. At the same time, limited supply of well-located industrial land kept competition strong, preventing any price correction.
Globally, improving conditions in commercial real estate helped sentiment. Falling interest rates and better deal flow supported investment decisions, especially for higher-quality industrial assets. However, growth was uneven. Some regions with strong migration and infrastructure upgrades saw rising land demand, while areas dependent on government or office-led activity experienced slower momentum.
The Land cost refers to all the expenses associated with the acquisition of the land, with or without property/buildings, by the company along with the cost needed to ready it for intended purpose. Companies may acquire land for several reasons, such as, for speculative purposes or as a part of its inventory. During the acquisition of a land, certain costs are ordinary and necessary and those must be assigned to Land.
So Land purchase cost includes real estate commissions, legal fees, bank fees, title search fees, and array of similar expenses. This cost also includes site preparation expenditures such as grading and draining, or the amount required to rebuild an old structure. All these costs are necessary to get the land ready for its actual or intended use. Additional land improvement cost may also incur, which include the expenditures on areas like parking lots, landscaping, irrigation systems, lighting, drainage systems, utility lines and similar things.
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