The rise of in­dus­trial real es­tate

De­vel­op­ers and in­vestors rush to buy land across states for in­dus­trial and lo­gis­tics parks to take ad­van­tage of the in­creas­ing con­sump­tion and the e­com­merce story

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Mad­hurima Nandy mad­hurima.n@livemint.com

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 three or four trans­ac­tions in Ma­ha­rash­tra, Kar­nataka and Tamil Nadu.

“We have ac us­tomer-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 on­the 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. Last week, in a ma­jor pol­icy bailout for long-stuck Na vi Mum­bai Spe­cial Eco­nomic Zone Pvt. Ltd, the Ma­ha­rash­tra gov­ern­ment al­lowed the pro­mot­ers to con­vert the 1,842-hectare SEZ into an “in­te­grated in­dus­trial town­ship”.

“There was a lot of ex­u­ber­ance around SEZs but not many gained from them due to less de­mand, more sup­ply lead­ing to the in­evitable fall. A lot many things are in or­der to­day, mak­ing in­dus­trial real es­tate more prac­ti­cal and doable,” said San­jay Dutt, CEO, op­er­a­tions and pri­vate funds, As­cen­das-Sing- bridge In­dia.

As­cen­das-Sing­bridge Group man­ages 30 mil­lion sq. ft of in­dus­trial space across Asia-Pa­cific, and plans to build 15-16 mil­lion sq. ft of ware­hous­ing and lo­gis­tics space in In­dia in the next five to six years with First-space Realty, jointly in­vest­ing $600 mil­lion. Em­bassy In­dus­trial Parks Pvt. Ltd, a col­lab­o­ra­tion be­tween realty firm Em­bassy Group and an af­fil­i­ate of War­burg Pin­cus, is look­ing to buy land in Mum­bai, Ben­galuru and Delhi, the sweet spot be­ing 25-30 acres in each city. By March-April, it would have 10 mil­lion sq. ft of de­vel­opable land.

“Buy­ing land is not easy but we are build­ing our busi­ness the way Em­bassy built its of­fice park port­fo­lio. It helps that we are al­lowed to draw long-term, cheaper debt af­ter the lo­gis­tics space was granted in­fra­struc­ture sta­tus,” said An­shul Sing­hal, CEO, Em­bassy In­dus­trial Parks.

Lodha Group is also plan­ning to de­velop a 150-acre lo­gis­tics and value-added in­dus­tries park in the Mum­bai Met­ro­pol­i­tan Re­gion (MMR), as part of its aim to have $1 bil­lion of as­sets un­der man­age­ment by 2021. The lo­ca­tion is 45 min­utes from Jawa­har­lal Nehru Port Trust (JN PT) and half an hour from the up­com­ing air­port in Navi Mum­bai.

“We are in the process of fi­nal- iz­ing our busi­ness plan and part­ner and ex­pect to start work on the site in the next few months,” said Ab­hishek Lodha, man­ag­ing di­rec­tor, Lodha Group.

Mahin­dra Lifes­pace De­vel­op­ers Ltd will de­velop two in­dus­trial clusters – 264 acres in north Chennai (with Ja­panese con­glom­er­ate Su­mit­omo Cor­po­ra­tion) and 268 acres near Ahmed abad, apart from ear­mark­ing 500 acres in Mahin­dra World City, Jaipur for in­dus­trial devel­op­ment and ag­gre­gat­ing land out­side Pune.

“The larger ques­tion is how will man­u­fac­tur­ing de­mand play out in In­dia ?” said Anita Ar jund as, man­ag­ing di­rec­tor and CEO, Mahin­dra Lifes­pace De­vel­op­ers.

MINT/FILE

In a bid to build ware­hous­ing parks, in­dus­trial clusters and town­ships, there is a rush to buy land across states.

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