New economy to be pillar for future plans of country's biggest realtors

The new economy is calling upon the country’s biggest real estate developers. Builders are tilting towards providing infrastructure for the new economy.

The data boom, the e-commerce revolution, and a rise in digital commerce have opened up the infrastructure segment for major real estate developers, so much so that some have started subsidiaries. Hiranandani Group, one of the largest developers in the country, is moving into e-commerce logistics, warehousing, co-working, and the data centre space.

The company has allocated around Rs 2,500 crore for the new developments. It has also come up with a new subsidiary for this.

“New business diversions involve huge capex. For example, the first data centre building we are putting up at Hiranandani Fortune City in Navi Mumbai will cost Rs 1,000 crore, and by December the building should be ready. We have plans for five such buildings in Navi Mumbai and Chennai. Similarly, in warehousing and logistics, we will offer an integrated township with industrial as also affordable housing for the workforce, along with social infrastructure. So our first two such forays, at Chakan near Pune and Oragadam near Chennai, are estimated to cost Rs 2,500 crore,” said Niranjan Hiranandani, chairman and managing director, Hiranandani Communities.

The light industrial and logistics space will require 839 million square feet by 2022. To tap such opportunities, Hiranandani Group has forayed into industrial and logistics parks under the “Green Base” platform. It plans to provide the best in class core infrastructure, which will be more customer-centric and build optimally and efficient for the end user. The company says the industrial, logistics, and warehousing sectors are a natural transition for Hiranandani Group. The new vertical will adopt the best practices of the world.

“We have unveiled a road map for the data centre space and core infrastructure under the new company ‘Yotta’,” he added. The data centre parks will be spread over 50 acres near major international fibre landing stations with a server hall capacity of over 60,000 racks and 500 Mw. The first data centre park is scheduled to go live by December at Hiranandani Fortune City, followed by Chennai and Mumbai.

According to industry experts, developers are venturing into other asset classes within real estate. DivyaSree has forayed into the student housing segment, and co-living major Youthville of Pune is backed by real estate firm Kohinoor Group. Similarly, the heads of realty firms including the Lodha, Godrej, and Unimark groups are betting big on the co-living segment and have invested in Gurugram-based start-up Housr. Bengaluru-based firms Salarpuria Sattva and Brigade Enterprises have ventured into this. Embassy Group has ventured into logistics and warehousing, besides betting big on co-working. 

Singapore-based real estate major Ascendas-Singbridge, one of the largest foreign developers in India, is eyeing logistics parks. Some co-working brands by leading developers include Buzzworks by Brigade Enterprises, WeWork by Embassy Group, CoWrks by RMZ Corp, GoWorks by Nimataya Group, Gopalan COworks by Gopalan builders, etc. “With the residential segment facing heat in the past four to five years, this diversification is natural. Plus, investors with an appetite for higher returns are looking at these alternative asset classes like co-living and student housing, which offer higher a rental yield of 11 per cent as against the 3 per cent in the residential segment,” said Anuj Puri, chairman, ANAROCK Property Consultants. According to ANAROCK Research, in the first half of this year, of the office space of 28 million square feet in the top seven cities, almost 5 million square feet was leased in those. 

ANAROCK Research indicates private equity investors have shifted their focus to these new asset classes. Private equity funds put nearly $1.1 billion in logistics and warehousing between the first quarter of 2017 and the equivalent period of this year.