This article is sponsored by IndoSpace
What have been the key events for your firm over the past 12 months?
In December 2018, IndoSpace achieved final close of its third and India’s largest logistics real estate fund, IndoSpace Logistic Parks III, with an equity commitment of $580 million, which, post leverage, will create a corpus of more than $1.2 billion. To date, we have acquired over 700 acres of land in the fund.
Last year, IndoSpace continued to expand its footprint beyond seven large markets into the states of Punjab, Haryana and Gujarat.
What has the operating environment been like in that time?
The overall warehousing and industrial real estate sector has been witnessing tremendous growth over the last few years. According to estimates, the supply of warehousing space is likely to double by 2022. The sector has also received one of the largest contributions in terms of foreign investment, and property advisory firm Colliers International estimates that investments in the Indian industrial and warehousing sector are to touch $7 billion by 2021.
On the macro front, manufacturing sector growth has been under pressure in recent times, while on the other hand, 3PL and e-commerce have witnessed increased activity. On a positive note, the share of A-grade space absorption across the country has almost doubled to 56 percent versus 30 percent three years ago. This indicates that prospective tenants are increasingly opting for high-quality A-grade space.
With the rollout of GST and setting up of industrial corridors, the government has taken steps in the right direction and this has resulted in increased demand for warehousing spaces from new markets.
“Investments in the Indian industrial and warehousing sector are to touch $7 billion by 2021”
What key challenges did you have to overcome?
The key challenge for us continues to be availability of land with clear title and approvals. In instances where both are satisfactory, the affordability of land from a returns perspective becomes important. Also, given that land holdings are typically small, the time and effort required towards aggregating land parcels is potentially lengthy. This introduces an element of uncertainty and poses the risk of delay in acquiring land parcels of a certain scale suited for warehouse development.
To address the challenges related to land acquisition, we have positioned our investment strategy to strengthen the regional presence in our investment teams. This has enabled us to focus our efforts towards completing multiple due diligence processes in parallel and in a time bound manner. Through our partnership with GLP, we have benefitted by having access to an extensive global customer network.
What or who is mainly responsible for your success?
All our partners – Everstone, GLP, CPPIB and Realterm – have contributed to IndoSpace’s expansion and maintaining its position as India’s largest investor, developer and manager of A-grade industrial and logistics real estate. The single most important factor is our largest and best in-house team of over 200 professionals, who have helped this organization grow and made us the only pan-India network, with a portfolio of 36 million square feet across 35 parks under various stages of development.