This is Mapletree’s first acquisition in India’s logistics space and the first large real estate deal to be signed after the coronavirus-led lockdown was imposed across the country in March.
The warehouse is still under construction and is targeted at Chakan’s well-established automobile manufacturing industrial area hosting plants of Bajaj Auto Ltd, Mercedes Benz, Mahindra & Mahindra Ltd and Volkswagen, besides several auto component makers. “This is a sale of 0.7 million sq ft of the park,” said the first of the two people, requesting anonymity. “There are no tenants yet for the warehouse, but that will change within the next 12 months when construction is over.”
This is Pune-based KSH Infra’s, which develops warehousing, logistics and offers industrial infrastructure services, second industrial warehouse. According to its website, the warehouse, once complete, will host five standalone structures covering 1.27 million sq ft and will have easy access to Mumbai’s ports and airports. Financial services firm, Avendus Capital Pvt Ltd, was the financial advisor to KSH on the deal.
For Mapletree, it will be the first investment in India’s growing organised logistics space, after successful acquisitions in commercial real estate. In December 2018, Mapletree acquired Chennai-based information technology park, SP Infocity, for around ₹2,400 crore from Canada Pension Plan Investment Board (CPPIB) and Shapoorji Pallonji Investment Advisors. In December 2019, Mapletree bought a prime eight-acre land parcel for ₹170 crore in Pune, near the city’s airport, from Ajanta Enterprise, a special purpose vehicle held partly by real estate construction firm, Vascon Engineers Ltd. Mapletree is building a 1 million sq ft office space here at a project cost of ₹1000 crore.
Mint had earlier reported that Mapletree has been gearing up to invest in India’s logistics space. In 2018, the firm had appointed Souvik Mukherjee to head logistics development in India and for office investments, and Hardeep Dayal as head of investments and asset management, to spearhead these acquisitions.
The latest acquisition of KSH’s industrial warehouse has been in the works since April 2019.
KSH Infra, Mapletree and Avendus Capital did not respond to emailed queries regarding this transaction.
While the covid-19 pandemic and the subsequent national lockdown have considerably slowed economic and investment activities in the country, the long-term prospects of organised and automated logistics services are bright. A report in May by real estate and commercial property advisor, JLL, said the 75-day national lockdown that restricted the interstate movement of goods has frozen supply chains within multiple sectors, both of production as well as stock piling.
“While the warehousing sector in the country has been on a phenomenal growth path, recent changes or the immediate response to the global pandemic has temporarily slowed down its meteoric growth,” said Ramesh Nair, chief executive officer (CEO) and country head, JLL India, in the report.
“Driven by new supply in eight major metros including Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi NCR (national capital region), and Pune, the sector saw a 15% contraction (in million square feet) from January to March 2020. Net absorption stood at 5.9 million sq ft before the lockdown started in March.”
In the short run, while few sectors like auto, heavy machinery and chemicals might renegotiate existing rentals, sectors such as fast moving consumer goods (FMCG), e-commerce, pharmaceuticals and cold storage will see increased growth and demand for warehouse spaces. Occupiers will re-align their overall real estate strategy based on the post covid-19 scenarios such as migrant labourers, consumer demand and government support.
“We’re expecting warehousing to see structural changes, both traditional and transformational, concerning facility management, supply chain, project grade specifications and transactional clauses,” Nair said.