Puravankara to invest Rs 1,500 cr in warehousing on e-commerce surge

Real estate company Puravankara is planning to enter warehousing realty sector as the opportunity in the segment expands because of the Covid-19 pandemic.

The company will invest Rs 1,500 crore in the business in the next five years through joint ventures (JV) and strategic partnerships, said its top executive. Currently, it has tied up with Morgan Stanley as a JV partner for the warehousing business and will be concentrating on Bengaluru, followed by Mumbai, Hyde­rabad, Chennai and Pune.

“The warehousing opportunity has gone beyond lifestyle products and even food and groceries. As e-commerce is making such big promises, quick availability of products has become critical. So, every company, whether it is e-commerce or non-e-commerce, will have to have a hybrid model for survival, and we want to be a part of this opportunity,” said Vishal Mirchandani, chief executive officer, commercial and retail, Puravankara. 

According to a Knight Frank report, the pan-Indian footprint of e-commerce warehousing is 50 msqft, with over half of it occupied by Amazon. Flipkart comes next, with 15 per cent share, and both of them have a total occupancy of 70-75 per cent. The sector’s appetite for warehouses has grown 55 per cent CAGR in FY17-20.

With Bengaluru being a hub e-commerce, Embassy Group is developing a warehousing facility at Hosur,  spread across 1.3 msqft at a cost of Rs 280 crore. “We believe that e-commerce will drive the need for warehousing,” said Aditya Virwani, chief operating officer, Embassy Group.

According to reports, the company is exploring options to monetise its warehousing and industrial parks business at an enterprise value of Rs 1,700-2,000 crore.  

In July, Amazon said it plans to set up 10 new fulfillment centres, increasing its warehousing capacity by 20 per cent. After this expansion, Amazon will have about 60 fulfillment centres spread across 15 states.

While e-commerce firms are mostly driving the demand for large warehouses, industry experts said developers were now receiving considerable enquiries from e-tailers in Bengaluru and Pune. 

Further, with rising consumerism and smartphone penetration, e-commerce will continue to operate and warehousing will continue to benefit from this.

“Warehousing will not disappear and it’s an important driver of the consumption economy. So, we want to be part of that opportunity,” Mirchandani added.