Re­tail, ware­hous­ing wit­ness in­creased pri­vate eq­uity in­ter­est

Hindustan Times (Chandigarh) - Estates - - HtEstates - Arun Puri ■ ht­es­tates@hin­dus­tan­

Apart from the favourite as­set classes of of­fice and res­i­den­tial, pri­vate eq­uity (PE) has been tak­ing in­creased in­ter­est in ware­hous­ing, lo­gis­tics and re­tail real es­tate. PE in­vestors and over­seas de­vel­op­ers are al­ready look­ing at op­por­tu­ni­ties to en­ter In­dia’s in­dus­trial and ware­hous­ing sec­tor by in­vest­ing in var­i­ous de­vel­op­ment projects.

In­vestors from other na­tions, in gen­eral, and Asian coun­tries such as China, Ja­pan and Korea, in par­tic­u­lar, have shown a lot of in­ter­est in­dus­trial de­vel­op­ment projects.

With the im­ple­men­ta­tion of Goods and Ser­vice Tax (GST), ware­hous­ing and lo­gis­tics’ spa­ces will start to see a con­sol­i­da­tion of as­sets. Un­like ear­lier (small as­sets in var­i­ous states), de­vel­op­ers will fo­cus on the de­vel­op­ment of large-scale, tech­no­log­i­cally ad­vanced ware- houses. Such as­sets will at­tract pri­vate eq­uity (PE) in­vestors, since they can de­ploy a larger amount in fewer as­sets, mak­ing mon­i­tor­ing eas­ier. If they per­form well, such as­sets can even fetch a bet­ter val­u­a­tion when mon­etis­ing through REITs or other ways.

In the past few months, key leasehold re­tail as­sets across the coun­try have come on the PE radar. A few rea­sons in­clude well-man­aged Grade-A malls start­ing to en­joy bet­ter oc­cu­pan- cy with rent es­ca­la­tion on the cards, af­ter a lull of six to seven years. Such well-man­aged as­sets will at­tract in­vestor fo­cus.

Var­i­ous new reg­u­la­tions like eas­ing for­eign in­vest­ment for sin­gle-brand re­tail­ers, longer shop­ping hours and an up­dated frame­work for es­tab­lish­ing Real Es­tate In­vest­ment Trusts (REITs) have at­tracted the at­ten­tion of var­i­ous PE funds.

Grade A malls are at­tract­ing PE in­vestors.


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