Private equity major Everstone Group-backed industrial real estate and logistics parks developer IndoSpace is looking to deploy over $1 billion to acquire new warehousing and logistics assets across India over the next two-three years amid rising demand, led by improved connectivity and government’s supportive policies, said a top executive of the company.
The joint venture between Everstone, Singapore-headquartered logistics facilities provider GLP and industrial real estate firm Realterm, will also be developing additional 30 million sq ft warehousing properties in the country.
“With the improved connectivity and recent government initiatives, we believe that modern, large, best-in-class logistics and grade A industrial warehousing facilities will continue to be in demand. The booming e-commerce sector and evolving consumption patterns are driving demand for modern logistics and quality warehousing facilities,” Rajesh Jaggi, Vice Chairman-Real Estate, Everstone Group, told ET.
Additionally, according to him, the rapid rebound of the manufacturing sector, fuelled by electronics and automotive industries, including electric vehicles, are generating strong rental growth across multiple markets in India.
As a leading investor, developer, and operator of grade A industrial and logistics real estate in India, IndoSpace has the largest national network of 52 logistics parks with 58 million sq ft delivered and under development across key Indian cities.
In the backdrop of rising demand, IndoSpace will keep deepening its presence in the existing 11 markets and target expansion further into the top eight tier-I markets over the next three years.
The company has already invested close to $3 billion, through a combination of equity and debt, in assets under management across its investment vehicles.
It is currently raising its fourth development vehicle IndoSpace Logistics Parks IV (ILP IV) with a target fund size of $600 million.
The Canada Pension Plan Investment Board (CPP Investments) has already invested over $205 million as an anchor investor in this new fund taking the CPP Investments and IndoSapce’s partnership over $1 billion in assets including earlier investments.
“With our recent fundraising efforts, our objective is to augment the IndoSpace portfolio by around 25-30 million sq ft within the next three to four years, equating to an annual target of developing 8-10 million sq ft furthering IndoSpace’s leading position in the Indian market,” Jaggi said.
ILP-IV will focus on India’s largest logistics real estate markets including Mumbai, Delhi-NCR, Bangalore, Pune, Chennai, Hyderabad, Kolkata, and Ahmedabad.
The company recently acquired 8.18 lakh sq ft of grade A warehousing asset, the Amazon Fulfilment Centre in Hyderabad from GMR Group at an enterprise value of Rs 188.1 crore further expanding its pan-India portfolio. This was IndoSpace’s maiden acquisition in the southern city that strengthens its regional presence and significantly expands its key tenant relationship.
Industrial and warehousing have emerged as a high-growth real estate asset class, buoyed by rising consumer demand and accelerating manufacturing investment. The National Logistics Policy, announced recently by the government, is expected to give a further boost to investments in the sector.
The warehousing sector is expected to record the highest ever absorption of space this year due to the aggressive expansion of e-commerce and the growth of third-party logistics (3PL) companies.
Against this backdrop, several estimates show that around $13 billion funding is required for the development of new warehousing capacity in India over the next decade. Given the market opportunity, a robust warehousing and logistics infrastructure that meets global standards, can help attract investment in the country and enable more commerce in the region, driving competitiveness.
