In Realty, Ware­hous­ing and Re­tail Catch PE Firms’ Fancy

For­eign pri­vate eq­uity in­vestors, in­clud­ing those from China, Ja­pan and Korea, are show­ing in­ter­est in in­dus­trial devel­op­ment projects in the back­drop of GST im­ple­men­ta­tion

The Economic Times - - Companies: Pursuit Of Profit -

So­bia Khan & Kailash Babar will de­velop around10 mil­lion sq ft of ware­hous­ing and lo­gis­tics space around Delhi, Mumbai, Pune, Chennai, Ban­ga­lore, and Nag­pur — cities with in­dus­trial hubs.

Ac­cord­ing to ex­perts, the lo­gis­tics expenses can be set off as in­put costs by man­u­fac­tur­ers once Goods & Ser­vices Tax is im­ple­mented. This is ex­pected to make ware­house hubs lo­cated away from ex­pen­sive ur­ban lo­ca­tions equally at­trac­tive. In these lo­ca­tions land is avail­able in larger for­mat and thus more and more In­te­grated Lo­gis­tics Parks can be de­vel­oped that will of­fer fur­ther value add in the sup­ply chain man­age­ment.

“Tax par­ity across states means lo­gis­tics hubs can be de­vel­oped on the ba­sis of con­nec­tiv­ity rather than oc­troi bound­aries. Dis­ad­van­tages of cross­ing over tax ju­ris­dic­tions in the sup­ply chain are gone and GST of­fers a tax neu­tral en­vi­ron­ment to lo­gis­tics in­dus­try,” Arya said.

Apart from lo­gis­tics, key lease­hold re­tail realty as­sets across the coun­try have come on the pri­vate eq­uity play­ers’ radar. Rea­sons for this in­clude well-man­aged Grade-A malls start­ing to en­joy bet­ter oc­cu­pancy with rent es­ca­la­tion on the cards af­ter a lull of six to seven years. Such well-man­aged as­sets/ en­ti­ties will con­tinue to at­tract in­vestor fo­cus.

In 2016, GIC bought a 50% stake in Vi­viana Mall of Sheth De­vel­op­ers in Mumbai, Black­stone ac­quired the re­tail port­fo­lio of Al­pha G Corp through an en­tity level deal, and Black­stone also bought 50% stake in Pune’s Wes­tend Mall.

Var­i­ous new reg­u­la­tions such as 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 pri­vate eq­uity funds like Black­stone, Xan­der, GIC, Mor­gan Stan­ley to­wards the In­dian re­tail real es­tate sec­tor.

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