Retail, warehousing witness increased private equity interest
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.