Investment in Warehousing

By investing in various development projects several private investors are trying to enter into the industrial and warehousing sector. Foreign investors, including those from China, Japan and Korea, have specifically shown a lot of interest in interest in industrial development projects in the backdrop of implementation of Goods & Services Tax.

With the implementation of Goods and Service Tax, warehousing and logistics’ spaces will start to see a consolidation of assets. Unlike earlier (small assets in various states), developers will focus on the development of large-scale, technologically advanced warehouses. Such assets will attract private equity (PE) investors, since they can deploy a larger amount in fewer assets, making monitoring easier. Depending on the performance, such assets can even fetch a better valuation when monetising through REITs or other ways

Recent announcements regarding Wanda Industrial New City to be developed by Dalian Wanda Group, industrial parks by China Fortune Land Development Company Private (CFLD), Japanese investment zone at Supa and Chinese industrial zone in Vadodara have indicated their increasing interest in India.

Increased infrastructure spending will give a thrust to the manufacturing sector and allied sectors. This will automatically translate into higher demand for logistics and warehouse management course in kerala. Further there will be greater institutional participation in logistics, especially warehousing development. There will be more funds with specialist fund managers to focus and manage these kinds of investments. With implementation of GST scale from logistics will move from un-organised to organised and mere warehousing will make way for integrated logistics parks. Thus the private equity players’ and investors’ interest in logistics will increase.

One of China’s largest developers, Dalian Wanda Group, has signed a pact with the Haryana government last year to develop Wanda Industrial New City with an investment of $10 billion over 10 years. An agreement signed between China Fortune Land Development Company and Haryana state will also see large format industrial parks come up in the state. Development of smart cities and Japanese investment zones are paving the path to rising appetite for such assets.

According to experts, the logistics expenses can be set off as input costs by manufacturers once Goods & Services Tax is implemented. Thus the warehouse hubs located away from expensive urban locations will become equally attractive. In these locations land is available in larger format and thus more and more Integrated Logistics Parks can be developed that will offer further value add in the supply chain management.

Tax parity across states means logistics hubs can be developed on the basis of connectivity rather than octroi boundaries. Disadvantages of crossing over tax jurisdictions in the supply chain are gone and GST offers a tax neutral environment to logistics.
Apart from logistics, key leasehold retail  assets across the country have come on the private equity players’ radar. Reasons for this include well-managed Grade-A malls starting to enjoy better occupancy with rent escalation on the cards after a lull of six to seven years. Such well-managed assets entities will continue to attract investor focus.

Various new regulations such as easing foreign investment for single-brand retailers, longer shopping hours and an updated framework for establishing Real Estate Investment Trusts (REITs) have attracted the attention of various private equity funds like Blackstone, Xander, GIC, Morgan Stanley towards the Indian retail and real estate sectors.


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