Logistics market abuzz with entry of global players, PE fund managers
Some of the world’s largest logistics players and private equity fund managers are foraying into Indian industrial and logistics spaces in the country which has a total stock about of 350 million square feet.
Most of the players are looking to invest anywhere between $ 500 million to a $ 1 billion in the new ventures in the next couple of years, experts on this segment said.
Prolgis , the largest warehouse owner in the world, has roped in Vineet Sekhsaria, former executive director and head at Morgan Stanley Real Estate Investing India, as head of its Indian operations .
Prologis owned or had investmenots in properties and development projects spread about 1 billion square feet in 19 countries as of September last year.
According to sources, Prologis has drawn huge plans for Indian market and plans to build large warehouses near the major industrial and commercial centres of the county.
When contacted, a Prologis spokesperson said: “Prologis is always thinking about ways to grow our business and India is on its way to becoming an important logistics market. As the leading global company, we consistently position ourselves to take advantage of emerging opportunities, including exploring new markets.”
Alta Capital set up by Siddhartha Gupta , a former managing director at US based fund manager Blackstone, is also evaluating two or three platform level deals in the industrial and warehousing space, said Gupta.
Alta Capital has a managed account with a Singapore based fund.
Alta did a platform deal with warehousing developer Pragati last year wherein it spent $50 million and looking to deploy $150 million more.
It also bought two warehouses from Morgan Stanley last year.
“Australia with a population of 25.9million has a 750 million sq ft of Grade A stock. India has a Grade A and B stock of about 350 million sq ft in top 8 cities,” he said.
The overall industrial and warehousing space stock in tier I cities stood at 300 million sq. ft at end of 2022 and is expected to reach 342 million sq. ft.in 2023. Meanwhile, Vacancy levels in Tier I cities have decreased from 9.4 per cent in 2021 to 9 per cent in 2022 and the yields remain stable across the cities in 2022, said property consultant Savills India.
Recently, Mirae Asset Credit Opportunities Fund, part of Mirae Asset Investment Group, purchased a pre-leased Grade A industrial asset at Bhiwandi near Mumbai for Rs 130 crore. The industrial property, housed in the 160-acre K-Square Integrated Industrial Park and spreads over nine acres, was bought from Prakhhyat Group.
It was Mirae Asset Investment Group’s first acquisition under its India-focused funds allocation for high-grade Indian real estate opportunities.
Panattoni,one of the world’s largest industrial property developers, marked its debut in Asia by opening its first operational headquarters in India, located in Bengaluru, last year.
“Greater supply chain efficiency, rapid e-commerce growth, and consolidation among third-party logistics providers are all fundamental market drivers that India increasingly shares with its counterparts in the U.S. and Europe,” said Sandeep Chanda, managing director India, Panattoni.
Panattoni India introduced its ‘open book’ transparent business model of partnering with global institutional investors to facilitate the deployment of capital in direct investments in the fast-expanding Indian industrial and warehouse market,xx said adding” Our focus is to grow in the top eight Indian cities, and we aim to launch our first two to three projects by the end of 2023, involving an initial investment of $200 million (€193 million).”
He said the second phase of expansion in tier-2 markets would follow. “The opening of our Bengaluru HQ was preceded by our first Indian office in Mumbai. There are also plans to set up an office in Delhi to reinforce Panattoni’s presence in the major metropolitan centres,” he added.
Shobhit Agarwal , managing director at Anarock Capital said that due to Due to an increase in demand, Grade-A warehousing assets will witness anywhere between 15-20 per cent of annual growth over the next three to four years.”
“Post the COVID-19 pandemic, the Indian warehousing industry has gone from a sunrise sector to full-blown supernova status. Underpinning its tremendous growth potential in the future is rapidly rising demand from 3PL and e-commerce companies, and across sectors like retail, FMCG, manufacturing, and electronics.,” he said.
Chandranath Dey, India head – operations & BD, Logistics and Industrial at JLL said warehousing investment climate in the country is showing bright and sunny days ahead driven by buoyant warehousing demand / absorptions which is keeping the investor’s interest intact despite compressing yields.
” The unique advantage that this sector offers to investors over others include faster construction period and thus rolling income and higher land price appreciations over time, “Dey said, adding that in the near future, the sector is expected to find more activities in InVit Listing , AIFs and REIT apart from platform level investment deals.