Ascendas Firstspace looking to enter qcom logistics warehousing mkt

Singapore-based CapitaLand-backed Ascendas Firstspace is aggressively looking to gain a foothold in the quick commerce logistics warehousing market, where dark stores ranging between 2,000-3,000 sq ft sporadically located across urban centers are in high demand.

 

“We don’t have any in-city developments right now but we’re actively looking out. We haven’t found the right piece of land for the right price for us to invest, which made sense for us from a return perspective, but we’re definitely keen,” Aloke Bhuniya, chief executive officer at Ascendas Firstspace Development Management, told Business Standard.

 

The company has nearly $6 billion in assets under management in India.

 

The top executive noted that the company had not lost out on the first mover advantage, despite players like Everstone Group-backed IndoSpace and Welspun Group’s Welspun One having established themselves in this segment, as there was more than enough room to grow as quick commerce consumption trends were only seeing an uptick.

 

“When qcommerce started, the ecommerce guys dismissed it saying that it's a fad. Now, it’s become normal, people are ordering their staples through qcommerce. So, for a Mumbai, 10-minute delivery has the potential to do hundreds of locations which will have to be done through the smaller in-city dark stores no bigger than 3,000 sq ft. Some (companies) have found the A, B and C spots (first movers), but the D, E, F and more are still open,” Bhuniya said.

 

Warehouses or dark stores larger than 3,000 sq ft would lead to longer time durations for quick commerce deliveries, affecting the business cases for players like Blinkit, Zepto, Instamart and others in this sector, therefore within the city small stores would continue to be a key requirement. 

 

Ascendas Firstpace is likely to invest a fair share of the ₹4,000 crore - 5,000 crore investments planned for the next three to four years for developing 12 mn sq ft of industrial and logistics space, towards in-city developments, which Bhuniya said will add to the revenue mix, but the bulk of the contribution to revenue will still come from IT and business parks, and industrial logistics warehousing where sub-sectors of manufacturing of electronics, commercial electric vehicles, defence aerospace and fast-moving consumer durables have seen rapid growth pace. It plans to develop 4-5 million square feet annually in industrial and logistics.

 

The rising number of electric vehicles for last-mile deliveries, driven by companies wanting to reduce their carbon footprint, was changing the design requirements in logistics warehouses, the executive said, adding that the demand for the number of EV charging stations had risen dramatically, compared to a couple of stations which was a standard offering till a few years ago.

 

Bhuniya also noted that ecommerce was contributing to new warehousing volumes by bringing previously unwarehoused products into the organised sector.

 

Data centres and renewable energy installations in solar and wind were the new in-focus verticals for the group. With one data centre coming up in Mumbai, the company has three more in the works.

 

Bhuniya, however, added that land acquisition continues to be the biggest challenge for horizontal industrial and logistics developments in India. Despite this challenge, the industry was concentrated heavily on horizontal development while countries like China, and the land-starved ones like Japan were increasingly moving towards multi-story warehouses.