The rise and rise of industrial parks
Industrial real estate is fast emerging as the go-to asset class for investors and developers, as demand for special economic zones (SEZ) wanes and India’s consumption and e-commerce story gets a boost from the government’s Make in India initiative and the goods and services tax (GST).
In a bid to build industrial, logistics and warehousing parks, industrial clusters and townships, there is a rush to buy land across states, something that hasn’t happened since the SEZ frenzy more than a decade ago.
The warehousing and logistics sector, which attracted investments of more than a billion dollars in 2017, is gearing up for the next round which is expected to witness higher interest in building businesses around steady rental income.
At the top of the list is Canada’s Brookfield Asset Management Inc., which has invested in residential and commercial office real estate and is now evaluating opportunities in the industrial space.
“Brookfield is looking to invest in logistics parks. It may invest in a company or buy the facility or park itself,” said a person familiar with the company’s plans, who did not wish to be named.
A Brookfield spokesperson declined to comment.
Scouting for land is on in western India, including Mumbai and Pune, as well as in the national capital region (NCR), Gujarat, Chennai and Bengaluru.
Sydney’s LOGOS Group and Assetz Property Group from Singapore, which partnered in 2017 to invest $400 million to build logistics and industrial parks in India, is shopping for land.
Ben Salmon, co-founder and chief executive officer of Assetz Property Group, said they are planning to close at least 3-4 transactions in Maharashtra, Karnataka and Tamil Nadu.
“We have a customer-focused, long-term, annuity model approach where we will build logistics parks which get less rent but are focused on servicing companies, and may also do industrial parks for non-polluting, light manufacturing which attract higher rent and are more specialised,” Salmon said.
Niranjan Hiranandani-promoted Hiranandani Communities is planning to launch a 250acre industrial park in Talegaon, Pune after it recently got approval for an integrated industrial area. The firm has another 300 acres near Chennai and 77 acres in Nashik.
“It’s a big opportunity for us and we are in it for the long run. India wasn’t ready for this even five years back but with the government’s push to promote manufacturing and GST this is the right time,” said Hiranandani.
Maharashtra’s industrial policy is in fact based on the premise of providing an exit route to developers stuck with SEZs owing to difficulties in land acquisition, changes in tax laws by the central government.
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