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
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.