Post GST, more global investors set eyes on India's warehousing, logistics

A new set of investors such as Singapore’s Mapletree, UK’s CDC and Actis, Shapoorji Pallonji and others are joining their global peers to invest in warehousing and logistics facilities in the country, according to sources in the know.

These investors are looking to tap the opportunities in the segment in the post-Goods & Services tax (GST) regime, which has made the country a uniform market. Growing demand from e-commerce companies is an added attraction, sources said.

Mapletree has set up a dedicated team in Bengaluru, headed by Souvik Mukherjee who was chief investment officer at Shapoorji Pallonji Investment Advisors. An e-mail sent to Mapletree did not elicit a response.

Mapletree has Mapletree Logistics Trust, registered in Singapore and focusings on logistics investments in Asia. According to sources, UK’s CDC has also set up a team to invest in warehousing and industrial facilities in the country. It recently hired Sakar Mawandia from Singapore’s GIC to invest in such facilities. CDC has invested in affordable housing developers in the country. A mail sent to GIC also did not elicit a response.

Construction giant Shapoorji Pallonji is also looking to invest in warehousing facilities and has plans to tie up with an investor for a separate warehousing platform, sources said. It will be housed under Shapoorji Pallonji Real Estate.

When asked, Venkatesh Gopalakrishnan, chief executive of SP Real Estate, said: “The plans are in preliminary stages. It will fructify in five to six months.”

Experts such as Shobhit Agarwal, managing director at Anarock Capital, said considering the benefits of GST and the Multi-Modal Logistic Parks Policy, the industry has started moving from unorganised to organised space at a fast pace.

“As a result, in the next few years, we will see fewer and larger warehouses. Money will continue to chase asset owners with good quality, large, fully automated and smart warehouses,” Agarwal said.

A number of global players have already signed for ventures in the logistics and warehousing space. Canada’s CPPIB has signed for a joint venture (JV) with Indospace. LOGOS India raised $400 million in equity from Ivanhoé Cambridge, real estate subsidiary of Canada’s CDPQ, and Vancouver-based QuadReal Property Group to develop logistics facilities.

LOGOS India is a partnership between LOGOS Group and Assetz Property Group, headquartered in Sydney and Singapore, respectively. Singapore’s Ascendas-Singbridge Group also formed a $600-mn JV with Firstspace Realty to enter the industrial logistics and warehousing market.

Ashish Singh, partner at Actis Private Equity, says: “There are (already) too many players. As many players compete for tenant demand, rents and margins might see compression, since land prices or construction costs continue to escalate. This will create pressure on returns.”

He said Actis would look to invest in warehousing projects but only in those which justify a risk-return trade off, and will perhaps not take the platform route. 

However, Agarwal of Anarock said there is space for more investors. 

“Any new growing asset class will attract a larger audience but I believe there is enough appetite. A majority of the top eight cities have vacancy in single digit for Grade-A warehousing space; Mumbai's is less than one per cent, for example,” he said.

ALL GEARED UP

• Investors are looking to tap the opportunities in the segment in the post-GST regime and growing demand from e-commerce companies 
• Mapletree has set up a team in Bengaluru headed by Souvik Mukherjee Mapletree Logistics Trust is registered in Singapore 
• UK’s CDC has also set up a team to invest in industrial facilities in the country. It recently hired Sakar Mawandia from GIC to invest in facilities 
• Shapoorji Pallonji is also looking to invest in warehousing and has plans to tie up with an investor for a separate warehousing platform