Institutional investors, including sovereign funds, real estate funds, AIF (Alternate Investment Funds) funds, and pension funds, are increasingly interested in these assets because of the substantial development in demand for the warehouse and logistics sector throughout India. The second-highest share of equity investments in real estate assets went to the warehousing sector, after commercial offices. Experts predict that this preference for the asset class will also persist this year, surpassing preferences for residential, retail, or any other sector.
Given the spike in warehousing occupancy activities, particularly after the pandemic, there is a high demand for these assets, and the lack of operational assets for investments is a significant challenge. This is likely to encourage capital to flow towards new projects, either through the creation of platforms for a portfolio of projects spread across a number of significant markets or an alliance focused on a particular asset.
The second-highest share of equity investments in real estate assets went to the warehousing sector
In 2022, equity investments in office real estate totalled roughly $2.5 billion, with warehouse coming in second at $1.9 billion, residential construction coming in third at $654 million, and retail coming in fourth at $303 million. The warehousing sector has already attracted the most investments, totalling $216 million, in the first quarter of 2023. The manufacturing industry, which is the government’s primary priority area, can be credited with the expansion of the warehousing business. The warehouse industry has grown to be an essential part of the Indian economy’s commercial infrastructure given the country’s ambitions to become a significant global manufacturing hub.
Due to the expanding demand driven by demography, the penetration of eCommerce, and supportive legislative actions by the government, one of the largest international investors, the US-based Blackstone Group, recently announced its intention to make a significant investment in the development of storage and logistics in India. The demographics and consumption patterns of India, together with the country’s bright economic growth prospects, undoubtedly point to a sizable market opportunity for the industrial, storage, and logistics space. The government’s all-encompassing strategy for modernising the logistics industry will guarantee strong growth potential.
The US-based Blackstone Group recently announced its intention to make a significant investment in the development of warehouse and logistics in India
In the next three to five years, US company Blackstone plans to double the size of its countrywide inventory of warehouse space, from 40 million square feet to 100 million square feet. The fund and the big real estate player Hiranandani Group have already partnered to create GreenBase Industrial & Logistics Park, and they have jointly committed over Rs 3000 crore to the development of industrial and logistics parks in important Indian cities. The warehousing industry experienced a major uptick in 2022 as private equity investments increased by 45% year over year. Additionally, the average deal size increased significantly year over year by 128% to $272 million. It is noteworthy that the majority of these investments came from mature markets like the UAE, the USA, and Singapore.